Question

Chance Enterprises leased equipment from Third Bank Leasing on January 1, 2021. Chance elected the short-term lease option. Appropriate adjusting entries are made annually.

Related Information:
Lease term	1 year (12 monthly periods)
Monthly lease payments	$42,000 at Jan. 1, 2021, through Dec. 1, 2021.
Economic life of asset	5 years
Interest rate charged by the lessor	6%

Required:
Prepare appropriate entries for Chance from the beginning of the lease through April 1, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)

Answer 1

Answer
Date	Account Title	Debit	Credit
Jan-01	No Journal Entry required for Beginning of lease(short term lease)
Jan-01	lease expense	$     42,000
	Cash		$     42,000
	(To record quarterly lease payment)
Feb-01	lease Expenses	$     42,000
	Cash		$     42,000
	(To record quarterly lease payment)
Mar-01	lease expense	$     42,000
	Cash		$     42,000
	(To record quarterly lease payment)
Apr-01	lease expense	$     42,000
	Cash		$     42,000
	(To record quarterly lease payment)