Homework Answers
| Date | Account titles and explanation | Debit | Credit | |
| 1/1/2017 | Right-of-use of Asset A/c | $ 2,007,650 | (a) | |
| Liability for Lease A/c | $ 2,007,650 | |||
| (To record the lease) | ||||
| 1/1/2017 | Liability for lease A/c | $ 260,000 | (b) | |
| Cash A/c | $ 260,000 | |||
| (To record lease liability) | ||||
| 12/31/2017 | Expenses for Lease A/c | $ 260,000 | [c] | |
| Liability for lease A/c | $ 87,383 | (Accrued interest) | ||
| Right-of-use of Asset A/c | $ 172,617 | |||
| (To recognize lease expense) |
Working:
| (a) | Present value of lease payments = $260,000 * PVIFA 5%,10 years | |
| => =$260,000*7.72173 | $ 2,007,650 | |
| (c) | Accrued interest = ($2,007,650-$260,000)*5% | $ 87,383 |
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Exercise 21A-19 a-d
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1, 2017. The lease agreement called for annual rental payments of
$1,381 at the beginning of each year of the 3-year lease. The
equipment has an economic useful life of 7 years, a fair value of
$10,000, a book value of $8,000, and Blue expects a residual value
of $7,500 at the end of the lease term. Blue set the lease payments
with the intent of earning a...
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1. The lease arrangement is for 10 years. The building is
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2. The leased building has a cost of $3,600,000 and was
purchased for cash on January 1, 2017.
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