Question

Refer to the lease details in Problem 14-11B. Assume that this lease is classified as an operating lease instead of a finance lease. Problem 14-12B Accounting for operating lease Required 1. Prepare the January 1 journal entry at the start of the lease to record any asset or liability. 2. Prepare the January 1 journal entry to record the first $14,000 cash lease payment. 3. Prepare the December 31 journal entry to record amortization at the end of (a) Year 1, (b) Year 2, and (c) Year 3 4. Prepare the December 31 journal entry to record the $14,000 cash lease payment at the end of (a) Year 1 and (b) Year 2

Answer 1

. Jowenal Entries in the books of ke in the books of kwak Particulay Desit(a) 39.000 0 39,000 ② 14, OVO a teave Rental 1975 14,000 Anot the or To Leare Liability Leare Dr 14,000 Rental Expenne (Redention of lease liability) To cash Chard tolenor) 23 st Dee yo near ere Rental Expense the pr 12,025 Finance cost (Interest expene) Dr To cash (paid to lenor) On 2+рее чем 2 heare Rental Expense Ale Dr 12,975 Finance cost (Intent Expene) for 2015 To Cath tpaid to lenor) gst bee year Deprecation the Dr 13000 To Anet ale 315 bee year Depreciation the 14,000 13,000 13,000 13,000 To anet ale 314 bee year ② Depreciation the To Aset the Dr. 13000 13,000