Question

Exercise 21-5 Your answer is partially correct. Try again Kingbird Leasing Company cases a new machine that has a stand value of $72,000 to Sharer Corporation on a year noncance contract Thamrer Corcoration agrees to all of normal ownership including such costas insurance, taxes and maintenance. The machine has a 3-year life and no residual value the lea s igned on January 1, 2017 Kingbird Leasing Company expects to earn a 9% return on its investment. The annual rentals are payable on each December 31 (b) Prepare an amortization schedule that would be suitable for both the cor and the less and that covers at the years involved (Round present value f orcav e to decimal places, .g. 1.25124 and the final answer to decimal places g. 971.) Cick here to view factor tables Rent Recept/ Payment Interest Revenue/ pende Reduction of Pring 1/1/12 12/31/17 12/31/18 12/31/19

Answer 1

Solution:

Annual rental payments = $72,000 / Cumulative PV factor at 9% for 3 periods

= $72,000 / 2.53129 = $28,444

Date	Rent receipts/ Payments	Interest revenue / Expense	Reduction of Principal	Receivable / Liability
1-Jan-17				$72,000
31-Dec-17	$28,444	$6,480	$21,964	$50,036
31-Dec-18	$28,444	$4,503	$23,941	$26,095
31-Dec-19	$28,444	$2,349	$26,095	$0