Question

On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $16,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $103,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually (FV of $1, PV of $1, FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease Complete this question by entering your answers in the tabs below.

Answer 1

Answert present valec flease payments p/1-(1+r)" payment (D = $16.500 Rate of Interest (a) = 4% per annum semi annual interest (Y) = 4) = 2% %) 0.02 Number of payment periods (n) = 4 periods on Rental paymany present value (PV) = $16,500 (--(+27)4 = $16.500 F-1.02547 - $16500 x 3.305 .. present valle RW = $62,827 Amortisation schedule:- payments Decrease in Interest@2%, on a o outstanding balance Balance 2% Date Out Blanding Balance. - 1/1/2021 $ 62,827 6130/2001 $16.500 $1256.54 $ 15243.46 $47583.54 Bleikepell $16,500 $957.67 $ 15,548.23 $32035.21 6l30lee $ 16,500 $ 640.70 $15.859.30 $ 16,176 1963.12099 $16.500 $323.52 $ 16176 $ 0 Journal entry by Nath Langstrom Date particulars LE Debit I credit 2021 Right of use Asset Ale Dr $62.827 Jan-1 TO Lease payable 1 $ 62,827 jan-30 Interest expense Ale $1256.54 Lease payable ale $15243.46 To cash $ 16,500 Amortization expenses file or $15243.461 To Right of use Asset 1$ 15243:46 Dec31 Interest expense Ale $ 951.67 Lease payable Ale $ 15548.33 To cash $16.500 Amortization expenses ale or $15548.33 To Right of use Asset $15548.33 Ds DY

2) Journal enter by computerworld. bale particulars TLF Debit 21 cash Ale $16.500 Jun-3d- TO Lease Revenue credit 202 Dr $16,500 $10,300 $10,300 Depreciation expense Ale Do TO AÇcumulated Depreciation LE 103,000/563 Cash Ale or TO Lease Revenue |Dec-21 $16.500 $ 16,500 $10,300 Depreciation expense ale or TO Accumulated Depreciaelin [[103,000%)27 $10,300