Question

Natick Industries leased high-tech instruments from Framingham Leasing on January 1, 2021. Natick has the option to renew the lease at the end of two years for an additional three years. Natick is subject to a $50,000 penalty after two years if it fails to renew the lease. Framingham Leasing purchased the equipment from Waltham Machines at a cost of $200,142. V of $1. PV of $1. FVA of St PVA of St FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information Les tem Lease renewal option for an additional Quarterly lease payments Economie life of asset Interest rate charged by the lesson 2 years (8 quarterly periods) years (12 quarterly periods) $12,000 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter. Required: Prepare appropriate entries for Natick Industries from the beginning of the lease through March 31, 2021. Appropriate adjusting entries are made quarterly. Of no entry is required for a transaction/event, select "No journal entry required in the first account field. Round your intermediate calculations and final answers to the nearest whole dollar) View transactionist

Answer 1

solution working Noter @ on January 1,2021 Right Of Use asset = $2.00.142 calculation & Right of use aset = 812,000 PUAF (22,20) ri=8%. =) 8% -2% (n= 5x4 20% ] = $12.000 x 1- (1+0.03) 0.02 (10.02) = $12.000 X 16-6785 = $ 2.00.142 working Note! (6) on march 31.2001 interest expense = ($ 2,00.142 - 12.000)xxy - $3.763

working Note: ① Amortization expense = 2.00, 142 20 = 10,007 Credit(a) Journal entries Date Account title and explanation Jani, Right of use asset 2021 leale Payable (W.NO-a) Debit (6) $2,00.142 $2.00.142 Lease $ 12.000 Jani. 2011 Payable сал, $ 12,000 march 31, 2021 Interest ealense(w.ko-b) wase Payable ( 19.000 - $3.763) СОЛЬ $ 3.763 $ 8.234 $ 12.000 $10,007 march 31, 2021 Amortization expense Right of use asset (W.NO - ①) $ 10,004
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