Question

On January 1, 2021, Sweetwater Furniture Company leased office space under a 21-year operating lease agreement. The contract calls for annual lease payments on December 31 of each year. The payments are $12,250 the first year and increase by $825 per year. Benefits expected from using the office space are expected to remain constant over the lease term. Required: Record Sweetwater's lease payment at December 31, 2025 (the fifth lease payment), and December 31, 2035 (the fifteenth lease payment). (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) Answer is not complete. No Credit Date December 31, 202 Lease expense Cash Deferred lease expense payable Debit 13,075 1 2 December 31, 203 Lease expense 24,625 Cash X 24,625 X 0 X Deferred lease expense payable

Answer 1

Journal Entries

Date	Account	Debit	Credit	Note
30-Dec-25	Lease Expense	$20,500
	Cash		$15,550
	Deferred Lease Expense Payable		$4,950	$20,500 - $15,550
28-Dec-35	Lease Expense	$20,500
	Lease Expense Paid in Advance	$3,300		Adjusted against Deferred Lease Expense Account
	Cash		$23,800

Workings - Lease Table

Year	Amount
31-Dec-21	12,250.00
31-Dec-22	13,075.00
31-Dec-23	13,900.00
30-Dec-24	14,725.00
30-Dec-25	15,550.00
30-Dec-26	16,375.00
30-Dec-27	17,200.00
29-Dec-28	18,025.00
29-Dec-29	18,850.00
29-Dec-30	19,675.00
29-Dec-31	20,500.00
28-Dec-32	21,325.00
28-Dec-33	22,150.00
28-Dec-34	22,975.00
28-Dec-35	23,800.00
27-Dec-36	24,625.00
27-Dec-37	25,450.00
27-Dec-38	26,275.00
27-Dec-39	27,100.00
26-Dec-40	27,925.00
26-Dec-41	28,750.00
Total Amount	430,500.00
Total Number of Years	21
Expense Amount per year	20,500