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. Complete this question by entering your answers in the tabs below.

Answer 1

Answer: pago O Jaunal Enthics : [PYAF 44,2x2) 3.4 late General Ioana Debit.cccdito) Sans , Right f use asset (100 x 1-6+31)" $40,888 =>(11,000~3.71710) $40,888 interest Expense ($40,888* 3 888X 3:1) $1,227 To lease payable June 39 lease payable 2021 $9,773 To cash $11,000 2021 June 30, Amortization Expense (11,000-1,227)| 49,773 To right of of use asset interest Expense(40,888-9,77334 6934 ( $9,773 Dec 31, 2021 lease payable $10,066 To cash $11,000 Dec 31, Amortization Expense $10,066 2021 To right of use asset $10,066

② Journal Entry pat General Journal Debited credits $11,000 Cash June 30, 2021 To lease revenue $11,000 $9,200 200 Ture 30, Depreciation Supene 92,000 2x5ys. To accumulated depreciation cash — To lease revenue $9200 Dec 31, oool1 & 2021 $11,000 $9,200 Dec 31, Depreciation Expense To accumulated spreciation 20di $ 9,200