Question

High Time Tours leased rock-climbing equipment from Adventures Leasing on January 1, 2018. High Time has the option to renew the lease at the end of two years for an additional three years for $8,300 per quarter. Adventures purchased the equipment at a cost of $203,852.(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.)

Related Information:
Lease term	2 years (8 quarterly periods)
Lease renewal option for an additional	3 years at $8,300 per quarter
Quarterly lease payments	$15,300 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter.
Economic life of asset	5 years
Interest rate charged by the lessor	8%

Required:

1. Prepare appropriate entries for High Time Tours from the beginning of the lease through March 31, 2018. Appropriate adjusting entries are made quarterly.

High Time Tours leased rock-climbing equipment from Adventures Leasing on January 1, 2018. High Time has the option to renew the lease at the end of two years for an additional three years for $8,300 per quarter. Adventures purchased the equipment at a cost of $203,852.(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.)

Related Information:
Lease term	2 years (8 quarterly periods)
Lease renewal option for an additional	3 years at $8,300 per quarter
Quarterly lease payments	$15,300 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter.
Economic life of asset	5 years
Interest rate charged by the lessor	8%

Required:

1. Prepare appropriate entries for High Time Tours from the beginning of the lease through March 31, 2018. Appropriate adjusting entries are made quarterly.

• Record the beginning of the lease for High Time.
• Record the lease payment for High Time.
• Record the lease and interest payment for High Time.
• Record the amortization of right-to-use asset for High Time.

2. Prepare an amortization schedule for the term of the lease.

Answer 1