Question

On January 1, 2021, Robertson Construction leased several items of equipment under a two-year operating lease agreement from Jamison Leasing, which routinely finances equipment for other firms at an annual interest rate of 5%. The contract calls for four rent payments of $57,000 each, payable semiannually on June 30 and December 31 each year. The equipment was acquired by Jamison Leasing at a cost of $377,000 and was expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually.

Required:
Prepare the appropriate journal entries for the lessor (Jamison Leasing) from the beginning of the lease through the end of 2021. (suppose to be only two accounts for each entry)

a) June 30, 2021: Record the lease revenue received by Jamison Leasing.

b) June 30, 2021: Record the Depreciation expense for Jamison Leasing.

c) December 31, 2021: Record the lease revenue received by Jamison Leasing.

d) December 31, 2021: Record the Depreciation expense for Jamison Leasing.

Answer 1

Answer: Pgo Present value os periodic Lease payments . an = $57,000*3.76197 =$214,438 [: be cause of half year - present value of annuity of $1; n=4,8=2.5% Journal Entries: Date credit ca Jon 1 1214,432 - Stan 30 Lease payable difference) $57,000 1 Jun 30 General Trend Debit C$) Right-of-use asset $214,432 Lease payable interest Expense 2:54. X@14432-) $5,361 ( 51639 Cash (dease payment) Amortization Expense (57,000 $51,639 -5,361] Right-of-use asset Interest Expenseſas)(214,4387 $4,070 Lease payable (difference) $52,930 Cash Clease payment) Amortiĝation Expense(57,000 52,930 -4,070 Right-of-use asset $51,639 -51639) DEC 31 $57,000 Dec 31 $52, 930