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 $19,500
each, payable semiannually on June 30 and December 31 each year.
The computers were acquired by ComputerWorld at a cost of $109,000
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 Intermediate Accounting Tenth Edition table.)
Required:
Prepare the appropriate entries for both the lessee and the lessor
from the beginning of the lease through the end of 2021.
(If no entry is required for a transaction/event, select
"No journal entry required" in the first account field. (Round your
intermediate calculations and final answers to the nearest whole
dollar.)
Computation of Present Value of Lease | |
Half
yearly Payments*PVAF @2%, for 4 period) ($19500*3.80773) |
$74,251 |
Journal Entries in the books of Nath-Langstrom Services, Inc. | |||
Date | Account Tittle & Explanation | Debit | Credit |
1-Jan-21 | Right of use asset | $74,250.74 | |
Lease Payable | $74,250.74 | ||
record Lease Asset | |||
30-Jun-21 | Interest Expense( 74250.74*2%) | $1,485.01 | |
Lease Payable (BF) | $18,014.99 | ||
Cash | $19,500.00 | ||
record lease payment | |||
30-Jun-21 | Amortization Expense | $18,562.68 | |
Right of use asset | $18,562.68 | ||
record amortization Expense | |||
31-Dec-21 | Interest Expense [($74250.74 - $18014.29)*2%] | $1,124.73 | |
Lease Payable (BF) | $18,375.27 | ||
Cash | $19,500.00 | ||
( record lease payment) | |||
31-Dec-21 | Amortization Expense | $18,562.68 | |
Right of use asset | $18,562.68 | ||
record amortization Expense | |||
Journal Entries in the books of Computer World Leasing | |||
Date | Account Tittle & Explanation | Debit | Credit |
30-Jun-21 | Cash | $19,500.00 | |
Lease revenue | $19,500.00 | ||
record lease payment | |||
30-Jun-21 | Depreciation Expense ($109,000/10) | $10,900.00 | |
Accumulated depreciation | $10,900.00 | ||
Record Dep | |||
31-Dec-21 | Cash | $19,500.00 | |
Lease revenue | $19,500.00 | ||
record lease payment | |||
31-Dec-21 | Depreciation Expense ($109,000/10) | $10,900.00 | |
Accumulated depreciation | $10,900.00 | ||
( record depreciation) |
On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under...
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 $19,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $109,000 and were expected to have a useful life of Five years...
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 $19,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $109,000 and were expected to have a useful life of Five years...
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 $16,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $102,000 and were expected to have a useful life of Six years...
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 4%. The contract calls for four rent payments of $19,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computerworld at a cost of $109,000 and were expected to have a useful life of Five years...
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 $16,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $103,000 and were expected to have a useful life of five years...
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 6%. The contract calls for four rent payments of $11,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $92,000 and were expected to have a useful life of five years...
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 4%. The contract calls for four rent payments of $13,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $97,000 and were expected to have a useful life of Five years...
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 $10,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $91,000 and were expected to have a useful life of five years...
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 6%. The contract calls for four rent payments of $11,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computerworld at a cost of $92,000 and were expected to have a useful life of five years...
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 $14,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $98,000 and were expected to have a useful life of Seven years...