Question

On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 6%. The contract calls for four rent payments of $11,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $92,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually. (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: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease.

Record the beginning of the lease for Nath-Langstrom Services. Jan.1, 2021

Record the lease payment made by Nath-Langstrom Services. June 30,2021

Record amortization for Nath-Langstrom Services. June 30,2021

Record the lease payment made by Nath-Langstrom Services. Dec.31,2021

Record amortization for Nath-Langstrom Services. Dec. 31,2021

Requirement 2

Record the lease payment received by ComputerWorld Leasing. June. 30,2021

Record depreciation for ComputerWorld Leasing. June 30,2021

Record the lease payment received by ComputerWorld Leasing. Dec.31,2021

• Record depreciation for ComputerWorld Leasing. Dec.31, 2021

  

Answer 1

Solution :- P.Nol D Nath-Langstrom Services Inc Jowinal entries Date Account Debit (8) credit($) Ol-Jan-21 40,888 Right of use asset (see werking nde I belon lease liability (Entry to record leare liabilety) 40,888 Anterest expense 1,294 30-TUN ol 9,773 11,000 (See working noto 2 below) lease liability Cash (Entry to record interest expen -se and lease payment) | Amalization Expense Right of use asset (Entry to recod amortization Expence. 9, 773 130-Jun 9,773

P.2 31/ore 1 11,000 interest expense (see working 933 note a below) leage lability 10,067 Cach (Entry to record interest expence and leare payment Amortization Expenu 10,067 Right of use asset (Enday to record amortization expense) working notes - I Present value of lease payment 11,000 X 3.7171 31/Dec/ 10,067 1 40,888 Prerent value of an annuity of Sign=4, 1:31.

P.3 2 Amortization Schedule Date payment interest @ 3% Decorear in outstanding on outstanding cutstanding liability Pobletes balance 40,888 21 30 June 11,000 1,927 9,773 31,115 21 311 Dec 11,000 933 10,067 21,048 21 g) Computer world leasing Journal entries Date Account Debit (&) / Eredit(&) 11,000 11,000 30/Jun/ 21 Cash lease Revenue (entry to record amount received from lessee) Depreciation Expense Accumulated Depreciation (43000//) (Entry to recool Semi annual depreciation expense 9,200 17/uns (CE 9,200

Р.Ч 11,000 31/08/21 11,000 Cash ! lease Revenue Centry to record amount received from lessee) Depreciation expense Accumulated depreciation (22,000/5) 9,200 ailor) si 9,200 Entry to recad Semi Cannual depreciation expens) a lot please, vote positively. It's help any queries Comment below. pla... Tq...