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 $60,000 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 5%. Winn also paid a $276,000 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 $336,000. 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.)

439,395 January 01, 2021 Right-of-use asset Lease payable 439,395 276,000 January 01, 2021 Lease payable Cash 276,000 December 31, 2021 Interest expense Lease payable Cash 60,000 December 31, 2021 Amortization expense Right-of-use asset 5 December 31, 2021 Depreciation expense Accumulated depreciation - leasehold improvement December 31, 2022 Interest expense Lease payable Cash 60,000

Help me fill out journal entries. I tried but numbers aren't matched...

Answer 1

No	Date	Account Titles	Debit	Credit
1	January 01, 2021	Right-of-use asset	439395
		Lease payable		439395
2	January 01, 2021	Lease payable	276000
		Cash		276000
3	December 31, 2021	Interest expense [5% x ($439395 - $276000)]	8170
		Lease payable	51830
		Cash		60000
4	December 31, 2021	Amortization expense [($439395/3) - $8170]	138295
		Right-of-use asset		138295
5	December 31, 2021	Depreciation expense ($336000/3)	112000
		Accumulated depreciation-leasehold improvement		112000
6	December 31, 2022	Interest expense [5% x ($439395 - $276000 - $51830)]	5578
		Lease payable	54422
		Cash		60000
7	December 31, 2022	Amortization expense [($439395/3) - $5578]	140887
		Right-of-use asset		140887
8	December 31, 2022	Depreciation expense ($336000/3)	112000
		Accumulated depreciation-leasehold improvement		112000
9	December 31, 2023	Interest expense [5% x ($439395 - $276000 - $51830 - $54422)]	2857
		Lease payable	57143
		Cash		60000
10	December 31, 2023	Amortization expense [($439395/3) - $2857]	143608
		Right-of-use asset		143608
11	December 31, 2023	Depreciation expense ($336000/3)	112000
		Accumulated depreciation-leasehold improvement		112000