Question

Eye Deal Optometry leased vision-testing equipment from Insight Machines on January 1, 2021. Insight Machines manufactured the equipment at a cost of $310,000 and lists a cash selling price of $387,774. Appropriate adjusting entries are made quarterly. (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 Quarterly lease payments Economic life of asset Interest rate charged by the lessor 5 years (20 quarterly periods) $23, 250 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter 5 years 8% Required: 1. Prepare appropriate entries for Eye Deal to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021. 2. Prepare appropriate entries for Insight Machines to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021.

Answer 1

sowion I Debit Credit Date Jan1 2021 387774 I General Journal | Right of use Asset Lease payable [ To record lease payable] 387774 Jani , 2021 23250 I Lease payable cash [ To grecose Lease payment] 23250 Mar31, 2021 15960 Lease payable Interest Expense (397774 - 23250J2% 7290 Cash 23250 Mar 31, 2021| 19389 19389 Amortization expense (382274/20] Right of use asset [ To record amortization Хрече Date General Journal Debit Credit Jan 1, 2021 387774 310000 Lease receivable Cost of goods sold . sales revenue Equlpment [ To record sales ] 387774 310000

Jan 1 2021 23250 Cash Lease recevable [to record Lease recept] 23250 Far 31, 2011 23250 cash Interest revenue 1387774-23750]*2%. Lease Receivable 7290 15960 s to record Interest and Lease receivable]