Question

please help with the journal entries

Exercise 21A-10 a-d (Part Level Submission) The following facts pertain to a non-cancelable lease agreement between Crane Leasing Company and Larkspur Company, a lessee. May 1, 201 Commencement date Annual lease payment due at the beginning of $15,138.16 each year, beginning with May 1, 2017 Bargain purchase option price at end of lease term $4,000 Lease term 5 years Economic life of leased equipment 10 years Lessor's cost $50,000 Fair value of asset at May 1, 2017 $68,000 Lessor's implicit rate 8% Lessee's incremental borrowing rate 8% The collectibility of the lease payments by Crane is probable.

Answer 1

Journal Entries-
Date	Account titles and Explanations	Debit ($)	Credit ($)
5/1/2017	Right to use asset	$     68,000.00
	Lease Liability		$68,000.00
	(To record lease)
	Lease Liability	$     15,138.16
	Cash		$15,138.16
12/31/2017	Interest Expense (4228.95/12*8)	$       2,819.30
	lease Liability		$ 2,819.30
	Amortization Expense (68000/10*8/12)	$       4,533.33
	Right to use asset		$ 4,533.33
1/1/2018	Lease Liability	$       2,819.30
	Interest Expense		$      2,819.30
5/1/2018	Lease Liability	$     15,138.16
	Interest Expense	$       4,228.95
	Cash		$19,367.11
12/31/2018	Interest Expense (3356.21*8/12)	$            2,237.47
	Lease Liability		$      2,237.47
	Amortization Expense (68000/10)	$            6,800.00
	Right to use asset		$      6,800.00

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