Question

On January 1, 2021. Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $93.000 each, beginning December 31, 2021. and at each December 31 through 2023. The lessor HVAC Leasing calculates lease payments based on an annual Interest rate of 8% Winn also paid a $204,000 advance payment at the beginning of the lease. With permission of the owner. Winn made structural modifications to the building before occupying the space at a cost of $297,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. FV OSP of $1. FVA of $1. PVA SI. FVAD OF $ and PVAD of Su (Use appropriate factoris) from the tables provided.) Required: Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2023. Winn's fiscal year is the calendar year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollars.) Verwraction entry worksheet Journal entry worksheet Record the beginning of the lease for Winn Date General Journal Debit Credit January 01, 2021 Rght-of-use asset Leable

Answer 1

Page. No ① Answer Jowinal contries On Jan, 2001, Right of use asset = 204000 7- (1+84.737 8% J - 204000 + 239670 $ 443670 On dec 31, 2001, Interiesf expense = (443670 = 204000) x 8% $ 19174 Lease payable = 204000 = $68000 3 years ( 93000 +68000 -- 19174) Amortization expense = . .141826 ... Depreciation expense = 294000 3 years $99000 =

Page No ③ On dec 31, 2022, Interest expense (443670 — 204000 – ( 93000 - 19174) = $165844 X80. = $13268 Lease payable = 93000 – 13268 = $ 79732 Amortization expense - 93000 + 68000 – 13268 $147730 On dec 31, 2023, Interest expense = (443640 – 204000 – (93000 -19179) – 79733) x 8% . = 86112881 = $6889 Amortization expense = (43000 + 68000 – 6889) = $154111

Page No ③ Date , credit Jan 1, 2011 $443670 $204000 dec 31 2021 $93000 Particular Debit Right of use asset $443670 To lease payable Prepaid rent $204000 - To cash Interest expense 1964 lease payable $ 73826 To cash. Lease payable $68000 To prepaid rent Amortization expense $141826 To sight of use asset Depreciation expense : $99000 To accormulated depreciation - leasehold improveon Interest expense #13268 lease payable $99732 % Cas hease payable $68000 To prepaid vient $68000 4.141826 $99000 (dec3i, | 2022 $93000 $ 68000

Date dec 31, Page.no @ Debit I Coedit $147432 $147732 $99000 $99000 2022 Particular Amortization expense To right of use asset Depreciation expense accumulated depreciation interest expense tease payable To caff lease payable To prepaid rent $6889 dec 31, 2023 $86111. $93000 $68000 $68000 154111 Amortization expense To right of use asset $154511 $99000 Depreciation expense To accumulated depreciation - Icase hold improvement :- :$99000