Question

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. (EV of $1. PV of $1. EVA of $1. PVA $1. EVAD of $1 and PVAD of $1 (Use appropriate foctor(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 list 1 Record the beginning of the lease for Nath-Langstrom Services 2 Record the lease payment and interest expense for Nath Langstrom Services 3 Record the amortization expense for Nath-Langstrom Services Credit 4 Record the lease payment and interest expense for Nath Langstrom Services

Answer 1

No.	Date	General journal	Debit	Credit
1	January 01, 2018	Right­-of-­use asset	33038
		Lease payable		33038
2	June 30, 2018	Interest expense (33038*6%)	1982
		Lease payable (balancing figure)	15018
		Cash		17000
3	June 30, 2018	Amortization expense	15018
		Right­-of­-use asset		15018
4	December 31,2018	Interest expense (33038-15018)*6%	1081
		Lease payable (balancing figure)	15919
		Cash		17000
5	December 31,2018	Amortization expense	15919
		Right­-of-­use asset		15919
6	June 30, 2018	Cash	17000
		Lease revenue		17000
7	June 30, 2018	Depreciation expense (104000/5)/2	10400
		Accumulated depreciation		10400
8	December 31, 2018	Cash	17000
		Lease revenue		17000
9	December 31, 2018	Depreciation expense	10400
		Accumulated depreciation		10400