Question

On January 1, 2021, 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 4%. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computerworld at a cost of $90,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease.

Please show related work, thank you!

Answer 1

No	Date	General Journal	Debit	Credit
1	January 01, 2021	Right of use asset To Lease Payable	38077	38077
2	June 30 2021	Intrest Expense Lease Payable To Cah	762 9238	10000
3	June 30 2021	Amortization Expense To Right of use asset	9238	9238
4	December 31 2021	Intrest expense Lease Payable To cash	577 9423	10000
5	December 31 2021	Amortization Expense To Right of use asset	9423	9423
6	June 30 2021	Cash To Lease revenue	10000	10000
7	June 30 2021	Depreciation Expense To Accumulated depreciation	9000	9000
8	December 31 2021	Cash To Lease Revenue	10000	10000
9	December 31 2021	Depreciation Expense To Accumulated Depreciation	9000	9000

($10000*3.80773)= $38077