Question

Baillie Power leased high-tech electronic equipment from Courtney Leasing on January 1, 2021. Courtney purchased the equipment from Doane Machines at a cost of $260,000, its fair value. (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 2 years (8 quarterly periods) Quarterly lease payments $25,000 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter Economic life of asset 5 years Interest rate charged by the lessor 12% Required: Prepare a lease amortization schedule and appropriate entries for Baillie Power from the beginning of the lease through December 31, 2021. December 31 is the fiscal year end for each company. Appropriate adjusting entries are recorded at the end of each quarter.

Complete this question by entering your answers in the tabs below.

• Amort Schedule
• General Journal

Record the appropriate adjusting entries at the end of each quarter for Baillie Power from the commencement of the lease through January 1, 2021. December 31 is the fiscal year end for each company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to the nearest whole dollar.)

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Answer 1

Answer Page No O Amortization schedule Lease balance at the beginning = 25000 x 1-C1+372)612 ) 32 127 = 25000 X 7.23028 2X4=8 180757 6/30/21 10/31/21 13/31/22 6/30/22 - $180,757 Payment lease effective (decrease in lease date Payment interest balance balance 11121 $ 111121 $ 25000 $25000 $155757 3131122) $25000 $ 4673 $20327 $135430 $25000 $ 4063 $ 20,937 $114,493 9/30/21 $25000 $3435 $ 21,565 $ 92,928 $25000 $2788 $ 22,212 $ 70,716 $25000 $ 2121 $22879 $47837 $25000 $1435 $ 23565 $24272 19/30/22 $25000 $ 728 $24272 $0 lease payment = $25000 cofective interest - 34 x Previous lease balance decrease in balance - lease payment - effective interest lease balance - Previous lease balance - decrease in balance

Journal entries Page: Nad Date Particular Credit Debit $180757 Jan! 2021 Right of usegassel lease payable $180757 $ 25000 Jan ! 2021 $ 25000 Mar 31, lease payable Cash Interest expense lease payable cash Amortization expense $ 4673 $20327 2001 5000 Mar 31, 2021 Right of usefasset Interest expense Jun 30, lease payable $20,327 $20,327 $ 4063 $20937 $ 25000 $20937 $20937 2021 June 30, 202) cash Amortization expense Right of use of asset Interest expense Sep 30, lease payable $3435 $21565 202) $ 25000 Sep 30, Cash Amortization expense Right of use of asset $ 21565 202) $21565 dec31, Interest expense lease payable $2788 $ 22,212 2021 $25000 dec 31, cash Amortization expense Right of use asset $22,212 2021 $22,212