Question

Chance Enterprises leased equipment from Third Bank Leasing on January 1, 2018. Third Bank purchased the equipment at a cost of $1,550,000. Chance elected the short-term lease option. Appropriate adjusting entries are made annually. Related Information: Lease term Quarterly lease payments Economic life of asset Interest rate charged by the lessor 1 year (4 quarterly periods) $62,000 at Jan. 1, 2018, and at Mar. 31, June 30, and Sept. 30. 5 years 88 Required: Prepare appropriate entries for Chance from the beginning of the lease through December 31, 2018. (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.) View transaction list X 1 Record the beginning of the lease for Chance. > 2 Record the lease expense paid by Chance. 3 Record the lease expense paid by Chance. 4 Record the lease expense paid by Chance. 5 Record the lease expense paid by Chance. Credit

Answer 1

Answer
Adjusting entries:
Date	Account Titles and Explanation	Debit	Credit
01-Jan	Lease Expense	$62,000
	Cash		$62,000
	(To record quarterly lease payment)
31-Mar	Lease Expense	$62,000
	Cash		$62,000
	(To record lease payment for the quarter Apr - Jun)
30-Jun	Lease Expense	$62,000
	Cash		$62,000
	(To record lease payment for the quarter July - Sept)
30-Sep	Lease Expense	$62,000
	Cash		$62,000
	(To record lease payment for the qurter Sept - December)