Question

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CALCLATOR FULL SCREEN PRINTER VERSION Brief Exercise 21A-6 Skysong Company leased equipment from Costner Company, beginning on December 31, 2016. The lease term is 4 years and requires equal rental payments of $68,064 at the beginning of each year of the lease, startine en the commencement date (December 31, 2016). The equipment has a fair value at the commencement date of the lease of $250.000, an estimated useful life of 4 years, and no estimated residual value. The approprian interest rate is 6%. Click here to vien the factor table. Prepare Skysong's 2016 and 2017 journal entries, assuming Skysong depreciates similar eguipment it owns on a straight-line basis. (Credt account titles are automatically indented when the amount is entered. Do not indent mamually. For calculation purposes, use 5 decimal places as displayed in the facter table provided and round final aaswers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 12/31/16 (To record lease labiity) 12/31/16 (To record lease payment) 12/31/17 (To record interest expense) PelicyI2000-2020 JaheWlevSonsIns All Rights Reserved. A Division of Jshn wleySens Jec Version 4.24.1

Answer 1

		Debit	Credit
12/31/16	Leased equipment A/c Dr	68064
	To Lease Liability		68064
	(to record lease liability)
12/31/16	Lease Liabilty A/c Dr	68064
	To Cash		68064
	( to record lease payment)
12/31/17	Interest A/c Dr ( 2,50,000*6%)	15000
	To cash		15000