Question

Chec Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from international Machines at a cost of $129,170. (FV of $1. PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of SD) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) 2 years (8 quarterly periods) $17,000 at the beginning of each period 2 years $129,170 Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization is recorded at the end of each fiscal year (December 31) on a straight-line basis. Complete this question by entering your answers in the tabs below. Amort Schedule General Journal Prepare a lease amortization schedule for the term of the lease for Manufacturers Southern. (Round your intermediate calculations and final answers to the nearest whole dollar) < Prev 13 of 15 Next >

Answer 1

Solution:

Payment Date	Lease payments	Effective interest	Decrease in balance	Lease balance
1-Jan-21				$129,170
1-Jan-21	$17,000	$0	$17,000	$112,170
1-Apr-21	$17,000	$1,683	$15,317	$96,853
1-Jul-21	$17,000	$1,453	$15,547	$81,305
1-Oct-21	$17,000	$1,220	$15,780	$65,525
1-Jan-22	$17,000	$983	$16,017	$49,508
1-Apr-22	$17,000	$743	$16,257	$33,250
1-Jul-22	$17,000	$499	$16,501	$16,749
1-Oct-22	$17,000	$251	$16,749	$0
Total	$136,000	$6,830

Manufacturers Southern
Journal Entries
Date	Particulars	Debit	Credit
1-Jan-21	Equipment Dr	$129,170.00
	To Lease Payable		$129,170.00
	(To record lease)
1-Jan-21	Lease Payable Dr	$17,000.00
	To Cash		$17,000.00
	(To record lease payment)
1-Apr-21	Interest expense Dr	$1,683.00
	Lease payable Dr	$15,317.00
	To Cash		$17,000.00
	(To record lease payment)
1-Jul-21	Interest expense Dr	$1,453.00
	Lease payable Dr	$15,547.00
	To Cash		$17,000.00
	(To record lease payment)
1-Oct-21	Interest expense Dr	$1,220.00
	Lease payable Dr	$15,780.00
	To Cash		$17,000.00
	(To record lease payment)
31-Dec-21	Depreciation expense Dr	$64,585.00
	To Accumulated depreciation - Equipment		$64,585.00
	(To record amortization)
31-Dec-21	Interest expense Dr	$983.00
	To Interest payable		$983.00
	(To record interest expense accured)
1-Jan-22	Interest payable Dr	$983.00
	Lease payable Dr	$16,017.00
	To Cash		$17,000.00
	(To record lease payment)