Question

Exercise 15-17 Lessee and lessor; operating lease (LO15-4] On January 1, 2018, 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 6%. The contract calls for four rent payments of $17,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computerworld at a cost of $104.000 and were expected to have a useful life of Five years with no residual value. Both firms record amortization and depreciation semi-annually. (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: Prepare the appropriate entries for both the lessee and the lessor from the beginning of the lease through the end of 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations to the nearest whole dollar amount.) View transaction lat Journal entry worksheet Record the beginning of the lease for Nath-Langstrom Services Note: Enter debits before credits Date General Journal Debit Credit January 01, 2018 Record entry Clear entry View general Journal

Answer 1

Date	Account titles and explanation	Debit	Credit
1/1/2018	Right of use Asset	$ 63,191
	Lease Payable		$ 63,191
	17000*3.7171
	To record the beginning of lease
30-06-2018	Interest Expense (63191*3%)	$   1,896
	Lease Payable	$ 15,104
	Cash		$ 17,000
	To record Lease Payment
30-06-2018	Amortization Expense	$ 15,104
	Right-of-use Asset		$ 15,104
	To record the amortization expense
31-12-2018	Interest Expense ((63191-15104)*3%)	$   1,443
	Lease Payable	$ 15,557
	Cash		$ 17,000
	To record Lease Payment
31-12-2018	Amortization Expense	$ 15,557
	Right-of-use Asset		$ 15,557
	To record the amortization expense
In the book of Lessor
30-06-2018	Cash	$ 17,000
	Lease Revenue		$ 17,000
	To record the lease revenue
30-06-2018	Depreciation Expense (104000/10)	$ 10,400
	Accumulated Depreciation		$ 10,400
	To record Depreciation Expense
31-12-2018	Cash	$ 17,000
	Lease Revenue		$ 17,000
	To record the lease revenue
31-12-2018	Depreciation Expense	$ 10,400
	Accumulated Depreciation		$ 10,400
	To record Depreciation Expense