Question

Exercise 15-7 (Algo) Sales-type lease with no selling profit; lessor (LO15-2] Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $131,379. (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 rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) 2 years (8 quarterly periods) $17,000 at the beginning of each period 2 years $131,379 4% Required: Prepare a lease amortization schedule and appropriate entries for Edison Leasing from the beginning of the lease through January 1, 2022. Edison's fiscal year ends December 31. Complete this question by entering your answers in the tabs below. Amort Schedule General Journal Prepare a lease amortization schedule for Edison Leasing from the beginning of the lease through January 1, 2022. Edison's fiscal year ends December 31. (Round your intermediate and final answers to the nearest whole dollar. Enter all amounts as positive values.) Payment Date Lease Payments Effective Interest Decrease in Balance Lease Balance 01/01/2021 01/01/2021 04/01/2021 07/01/2021 10/01/2021 01/01/2022 04/01/2022 07/01/2022 10/01/2022 Total $ 0$ 0 $ 0

Answer 1

Lease Amortization Schedule   

Payment Date	Lease Payment	Effective Interest (1%×Outstanding Balance)	Decrease In Balance	Lease Balance
01/01/2021				$131,379
01/01/2021	$17,000	-	$17,000	$114,379
04/01/2021	$17,000	$1,144	$15,856	$98,523
07/01/2021	$17,000	$985	$16,015	$82,508
10/01/2021	$17,000	$825	$16,175	$66,333
01/01/2022	$17,000	$663	$16,337	$49,996
04/01/2022	$17,000	$500	$16,500	$33,496
07/01/2022	$17,000	$335	$16,665	$16,831
10/01/2022	$17,000	$169*	$16,831	0
Total	$136,000	$4,621	$131,379

* Round to $1

Effective Interest = Previous Lase Balance × 4% ×1/4 = 1%