Question

On January 1, 2021, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $102,000 each, beginning December 31, 2021, and at each December 31 through 2023. The lessor, HVAC Leasing calculates lease payments based on an annual interest rate of 8%. Winn also paid a $282,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $384,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. (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: Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2023. Winn’s fiscal year is the calendar year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollars.)

1. Record the beginning of the lease for Winn.

2. Record the advance payment made at the beginning of the lease by Winn

3. Record the lease payment for Winn.

4. Record the amortization the right-of-use asset for Winn.

5. Record depreciation for Winn.

6. Record the lease payment for Winn.

7. Record the amortization of the right-of-use asset for Winn.

8. Record depreciation for Winn.

9. Record the lease payment for Winn.

10. Record the amortization of the right-of-use asset for Winn.

11. Record depreciation for Winn

Answer is not complete. No General Journal Debit Credit Date January 01, 2021 Right-of-use asset Lease payable 282,000 January 01, 2021 Prepaid expense Cash 282,000 3 December 31, 2021 Interest expense Lease payable Cash 4 December 31, 2021 Amortization expense Right-of-use asset 5 December 31, 2021 Depreciation expense 128,000 Accumulated depreciation - leasehold improvement 128,000 6 December 31, 2022 Interest expense Lease payable Cash 7 December 31, 2022 Amortization expense Right-of-use asset 8 December 31, 2022 Depreciation expense 128,000 Accumulated depreciation - leasehold improvement 128,000 December 31, 2023 Lease payable Prepaid expense December 31, 2023 Amortization expense Right-of-use asset 11 December 31, 2023 Depreciation expense 128,000 Accumulated depreciation - leasehold improvement 128,000

Answer 1

$ 544,864 Answer: Journal Entry Dalt particulars Jan, 1/ Right of use asset Ale dr $544864 2021 pr f87,3 ) = 2.5771 |(282,000+(102.000 42.577) - To lease payable (Being to lease payment) Prepaid yout. Ale or $282900 m I to cash Being to adiance leaga poyment) Dec 31 Interest expense te dr $21029 2041 (544,864-282000) X 8%) lease payable 1 Alc dris 80,971 1. To cash $102,000 Being lease payment) Lease payable (282,000/3) Alcar $94000 1494000 L To Prepaid rent (Being advance tease payment) Amortization expense Alc ar $174,971 (102000 +9400021029) - To Right of use asset $174,971 (Being amortization expense Depreciation expense All dr $128.000 To accumulated Dupreacialion $ 128,000 (Being bepreciation expense 34000/3) Dec 31 Interest expenses Alc dr $14551 hole 644,864-182000-80971) 8%. Lease payable Ale dr $87449 - to Cash $102000 (Being second lease payable) Lease payable (282,000/3) Alear & 94000 1. To prepaid rent 1894000 Being advance lese payable) - Lease hold improvement tools)

credit $ 9811449 $128000 14102000 Date particulars Debit Dee 31 Amortization expenses the ar $181449 2022 (104000+94000-14551) - To Right of use asset Being amortisation expense) Depreciation expense Ale dr $128000 384,000/3) To accumulated depreciation Being Depreciation expense) Dec 31 Interest expense Ale dr $7556 2023 (544,864-182000-89971-87449) 8% tease payable Al ar $94444 6 To cash Being 3rd Lease payment) Ilease payable (282,000/3) Alcar $94,000 L to prepaid rent Being advance lease payable) Amortization expense any a *188444 (102,000+ 94000-7556) To Right of use asset Being amortization expense) Depreciation expense Ale dr $128000 (38400013) To accumulated Depreciation lease hold ineprovement Being Depreciation expense ) $94000 $ 188,444 |$ 128000