Question

1.		The lessee makes a lease payment of $73,600 to the lessor for equipment in an operating lease transaction.
2.		Sandhill Company leases equipment from Noble Construction, Inc. The present value of the lease payments is $644,000. The lease qualifies as a capital lease.

Prepare the journal entries that the lessee should make to record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Account Titles and Explanation	Debit	Credit
1.	enter an account title to record rent payment	enter a debit amount	enter a credit amount
	enter an account title to record rent payment	enter a debit amount	enter a credit amount
	(To record rent payment.)
2.	enter an account title to record lease asset and liability	enter a debit amount	enter a credit amount
	enter an account title to record lease asset and liability	enter a debit amount	enter a credit amount
	(To record lease asset and liability.)

Answer 1

Answer
	Account Titles and Explanation	Debit	Credit
1	Rent of Lease	$       73,600
	Cash		$       73,600
	(To record Rent payment )
2	Building	$     644,000
	Lease Liability		$     640,000
	(To record lease asset and liability.)