Question

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 $119,300. (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 rental payments $16,500 at the beginning of each period Economic life of asset 2 years Fair value of asset $119,300 Implicit interest rate 12% (Also lessee's incremental borrowing rate) 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

Answer 1

1. Lease Amortization Schedule

Payment Date	Lease Payments	Effective Interest	Decrease in Balance	Outstanding Balance
01/01/2021				119,300
01/01/2021	16,500		16,500	102,800
04/01/2021	16,500	3,084	13,416	89,384
07/01/2021	16,500	2,682	13,818	75,566
10/01/2021	16,500	2,267	14,233	61,333
01/01/2022	16,500	1,840	14,660	46,673
04/01/2022	16,500	1,400	15,100	31,573
07/01/2022	16,500	947	15,553	16,020
10/01/2022	16,500	480	16,020	0
TOTAL	132,000	12,700

2. Journal Entries

Date	Account title and Explanation	Debit	Credit
01/01/2021	Lease receivables Dr	119,300
	To Equipment		119,300
	(To record lease)
01/01/2021	Cash Dr	16,500
	To Lease receivable		16,500
	(To record cash received)
04/01/2021	Cash Dr	16,500
	To Lease receivables		13,416
	To Interest revenue		3,084
	(To record cash received)
07/01/2021	Cash Dr	16,500
	To Lease receivables		13,818
	To Interest revenue		2,682
	(To record cash received)
10/01/2021	Cash Dr	16,500
	To Lease receivables		14,233
	To Interest revenue		2,267
	(To record cash received)
12/31/2021	Interest receivables Dr	1,840
	To Interest revenue		1,840
	(To record interest revenue accured)
01/01/2022	Cash Dr	16,500
	To Lease receivables		14,660
	To Interest revenue		1,840
	(To record cash received)