Question

Exercise 15-7 Sales-type lease with no selling profit; lessor [LO15-2] Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2018. Edison purchased the equipment from International Machines at a cost of $110,623. (EV of $1. PV of S1. FVA of $1, PVA of $1. EVAD of $1 and PVAD of $) (Use appropriate factor(s) from the tables provided.) Related Information Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) 2 years (8 quarterly periods) $15,300 at the beginning of each period 2 years $110,623 128 nces Required: amortization schedule and appropriate entries for Edison Leasing from the beginning of the lease through January 1 2019. Edison's fiscal year ends December 31. Complete this question by entering your answers in the tabs below General Schedule Journal Amort Complete this question by entering your answers in the tabs below. Amort General Journal Schedule Prepare a lease amortization schedule for Edison Leasing from the beginning of the lease through Janu fiscal year ends December 31. (Enter your answers in whole dollars and not in millions. Round your in answers to nearest whole dollar. Enter all amounts as positive values.) EffectiveDecrease in Lease Balance Lease Payment date Payments Interest Balance 01/01/2018 01/01/2018 04/01/2018 07/01/2018 10/01/2018 01/01/2019 04/01/2019 07/01/2019 10/01/2019 Total KIAmort schedule General Journal> View transaction list Journal entry worksheet 6 7 3 4 Record the lease. Note: Enter debits before credits Date General Journal Debit Credit January 01, 2018 View transaction list Journal entry worksheet Record cash received. Note: Enter debits before credits. Debit General Journal Credit Date January 01, 2018 View general journal Clear entry Record entry View transaction list ournal entry worksheet 2 4 6 Record cash received. Note: Enter debits before credits. Date General Journal Debit Credit April 01, 2018 Record entry Clear entry View general journal View transaction list Journal entry worksheet 2 3 4 5 6 Record cash received. Note: Enter debits before credits. Date General Journal Debit Credit July 01, 2018 Record entry Clear entry View general journal View transaction list Journal entry worksheet K1 23 4 5 67 Record cash received. Note: Enter debits before credits. Credit Debit General Journal Date October 01, 2018 View general journal Clear entry Record entry Journal entry worksheet 2 4 7 Record interest receivable. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2018 View general journal Record entry Clear entry View transaction list Journal entry worksheet Record cash received. Note: Enter debits before credits. General Journal Date Debit Credit January 01, 2019 Record entry View general journal Clear entry

Answer 1

Edison Leasing Prepare a lease amortization schedule Effective Decrease in Lease Payment Date Lease Payments Interest Balance Balance 1.1.2018 1.1.2018 1.4.2018 1.7.2018 1.10.2018 1.1.2019 1.4.2019 1.7.2019 1.10.2019 110623 95323 82883 70069 56871 43277 29276 14854 0 15300 15300 15300 15300 15300 15300 15300 15300 122400 15300 12440 12814 13198 13594 14002 14422 14854 2860 2486 2102 1706 1298 878 446 Present Value of Lease Payments: ($15,300 x 7.23026*)- $110,623 * Present value of an annuity due of $1: n-8,-3% [ i 396(12% 4) because the lease calls for quarterly payments]

Prepare appropriate entries for Edison Leasing from the beginning of the lease. Journal Enteries Date 1.1.2018 Lease Receivable a/c Dr Debit in $ Credit in $ Particulars 110623 To Inventory Equipment 110623 1.1.2018Cash a/c DR 15300 To Lease Receivable 15300 1.4.2018Cash a/c DR 15300 To Lease Receivable 12440 2860 To Interest Income 1.7.2018Cash a/c DR 15300 To Lease Receivable 12814 2486 To Interest Income 1.10.2018 Cash a/c DR 15300 To Lease Receivable 13198 2102 To Interest Income 31.12.2018 Interest Receivable a/c Dr 1706 To Interest Income 1706 1.1.2019Cash a/c DR 15300 To Lease Receivable To Interest Receivable 13594 1706