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Hux Investments leased equipment from a leasing company on July 1, 2018 in a finance lease.....

Hux Investments leased equipment from a leasing company on July 1, 2018 in a finance lease.. The present value of the lease payments discounted at 10% was $75,600. Ten annual lease payments of $8,630 are due each July 1, beginning July 1, 2018. On December 31, 2018, what is the lease payable?

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Answer #1

The present value of the lease payments = $75,600.

Lease payment made on July 1, 2018 = $8,630

Lease balance on July 1,2018 = 75,600 - 8,630

= $66,970

Interest payable on December 31, 2018 = 66,970 x 10% x 6/12

= $3,348.5

Lease payable on December 31, 2018 = 66,970 + 3,348.5

= $70,318.5

Kindly comment if you need further assistance. Thanks

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