Homework Answers
| Date | Accounts Title & Explanation | Debit | Credit |
| 1/1/2020 | Right of Use Asset | $ 57,722 | |
| Lease Liability | $ 57,722 | ||
| (To record lease liability) | |||
| 1/1/2020 | Lease Liability | $ 20,000 | |
| Cash | $ 20,000 | ||
| (To record lease payment) | |||
| 31/12/20 | Lease Expense | $ 20,000 | |
| Lease Liability | $ 1,509 | ||
| Right of Use Asset | $ 18,491 | ||
| (To record lease expense) |
Working:
| Year | Cash Flows | PV Factor 4% | PV of Cash Flows |
| 1 | $ 20,000 | 1 | $ 20,000 |
| 2 | $ 20,000 | 0.96154 | $ 19,231 |
| 3 | $ 20,000 | 0.92456 | $ 18,491 |
| Lease Liability | $ 57,722 | ||
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