Question

Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2018. Edison purchased the equipment from International Machines at a cost of $136.768. (FV of $1. PV of $1. 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 Economie life of asset Fair value of asset Implicit interest rate (Also lessed's incremental borrowing rate) 2 years (8 quarterly periods) $18,000 at the beginning of each period 2 years $136,768 60 Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2019. Depreciation is recorded at the end of each fiscal year (December 31) on a straight line basis. Complete this question by entering your answers in the tabs below. Amort Schedule General Journal Prepare a lease amortization schedule for the term of the lease for Manufacturers Southern. (Enter all amounts as positive values.) Payment Date Lease Payments Effective Interest Decrease in Balance Lease Balance

Answer 1

$69,379 Answert calculation & Amortization schedule. Lease periods Annual Effective Interest payment outstanding payment 86 1.5%]x oul-standing reduction Balance. (A) (0) Balance (c) (p=B-c) (E-D] $136, 768 1/1/2018 $18.000 $18.000 | $ 118,768 14/2018 $18,000 $118.768 x 1.5% = $1782 $16218 $104,550 /2018 $18,000 $102,550x1.5%+41538 $ 16,462 $ 86,088 1/10/2018 $18000 $86088x1.5% = $1291 16,709 7/2019 $18,000 $69,379x1.525*1041 416,959 $52,420 114/2019 $18,000 $52.490x/5% = $786 *17214 $35,206 11/2019 18,000 35,206x15%-$528 $17479 $ 17,734 1/10/2019 $18,000 $17734x1.5% = $ 2661 $17734 Total $144,000 $7239 $136,768 | Journalentries IDate particulars LF Debit credit 2018 Leased equipment Ale $136768 To Lease payable $136,768 Being the Lease payable] Lease payable Ak $18,000 To cash $18,000 Being the quarterly leave payment] Apr-1 Interest expense A/C $1782 Lease Toayable Ale 16,218 Being the Interestex peuse and lease Po $18,000 To cash payment? Jul- 1 Interest expense Ale $1538 Lease payable Alc $ 16,462 1. To cash $18,000 Being the Interest and lease payment] loct 1 Interest expense Ale $1291 Lease payable Ale $16,709 c. To cash $18,000 Being Interest expense and Lease payment] Jan-1

$1041 $1041 $68,384 $ 68,384 Decal Interest expense Ale TO Interest payable being Interest expenses Deprecialion expenses ale or TO Accumulated Depreciation _$136,768/2 years? Being Depreciation expenses Interest payable Alc Lease payable Alc To cash Leing payment of Interest and Lease? 2019 Jan-1 $1041 $ 16,959 $18,000
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