Question

On January 1, 2021, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $72,000 each, beginning December 31, 2021, and at each December 31 through 2023. The lessor, HVAC Leasing calculates lease payments based on an annual interest rate of 8%. Winn also paid a $156,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $228,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. (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: Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2023. Winn's fiscal year is the calendar year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollars.) View transaction list X 1 Record the beginning of the lease for Winn. 11 > 2 Record the advance payment made at the beginning of the lease by Winn.. 3 Record the lease payment for Winn. 4 Record the amortization the right-of-use asset for Winn. lit Credit 5 Record depreciation for Winn.

Answer 1

2001 2021 156000 2021 Answer Page No Appropriate entries Date Particular Debit Coedit Jan', Right of use asset $341,551 To lease payable $341,551 ( Being lease payment) Jani, Prepaid rent $156000 To cash (Being advance lease payment) dec 31, Interest expense (C341551 - 156000) x87) $14,844 lease payable $57156 To cash $ 72000 (Being lean payment lease payable C 156000 $52000 To prepaid rent $52000 (Being advance lease payment) akc314 Amortization expense (12000 +52000 $109,156 To right of use asset $109,156 ( Being amortization expense depreciation expense ( 228.00 $76000 2021 to accumulated depreciation -lcase bold improve 76000 (Being depreciation expense) dec 31, Interest expense(84151 - 15000 - ) $10,372 57156)*8% Lease payable $61,728 To cash $72000 (Being second ſease payable) dec31, 3 yrs 2021 14844 2021 I dec 31, 2022

dec 31 2022 $52000 -102724 decal, 2022 12023 Page No @ lease payable (156000) $52000 To prepaid rent (Being advance lease payable) dee Bil Amortization expense (12000 +52000 Y# 113,728 2002 To vight of use asset $ 113,728 (Being amortization expense) Depreciation expense (228000) $ 76000 To accumulated depreciation $76000 (Being depreciation expense) dec 31, Interest expense (341551 -156000 $ 5333 lease payable 54156-6172849$ 66,66 7 To cash $72000 (Being third lease payment) dec31 lease payable C 156000) $50000 2023 To prepaid rent $52000 (Being advance lease payable dec31, Amortization expense (2000+53000*118,667 To right of use asset $118,667 (Being amortization expense) Idec31, Depreciation expense (228000) $46000 To accumulated depreciation -leashed improvement C Being depreciation expense') Than 1,201, Right of use asset - 156000+ (42000x 1-CI+84) 3T - 156000 + (TR000 [email protected])=34155) -5333 2023 2023 $76000