Question

Chapter 15 - Homework i Saved Check my work mode : This shows what is correct or incorrect for the work you 13 0.65 On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from Computer World Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $18,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computerworld at a cost of $106,000 and were expected to have a useful life of Five years with no residual value. Both firms record amortization and depreciation semiannually. (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.) points Required: Prepare the appropriate entries for both the lessee and the lessor from the beginning of the lease through the end of 2021. (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.) Answer is complete but not entirely correct. No General Journal Debit Credit 1 1 Date January 01, 2021 Right-of-use asset Lease payable 69,910 69,910 X 2 June 30, 2021 Interest expense 1,398 16,602 Lease payable Cash 18,000 3 June 30, 2021 ✓ 16,602 X Amortization expense Right-of-use asset 16,602 X 4 December 31, 202 Interest expense 1,066 X 16,934 X Lease payable Cash 18,000 5 16,934 x December 31, 202 Amortization expense Right-of-use asset 16,934 X 6 June 30, 2021 Cash 18,000 Lease revenue 18,000 7 June 30, 2021 10,600 Depreciation expense Accumulated depreciation 10,600 8 December 31, 202 Cash 18,000 Lease revenue 18,000 Oo oo 9 10,600 December 31, 202 Depreciation expense Accumulated depreciation 10,600

Answer 1

Solution:

Journal Entries - Nath-Langstrom Services, Inc.
Date	Particulars	Debit	Credit
1-Jan-21	Right of use asset Dr	$68,540.00
	To Lease Payable (18000*3.80773=68539.14=$ 68540		$68,540.00
	(To record right of use assets on lease)
30-Jun-21	Interest Expense Dr (68540*4%*1/2)	$1,371.00
	Lease Payable Dr (18000-1371)	$16,629.00
	To Cash		$18,000.00
	(To record lease payment)
30-Jun-21	Amortization Expense Dr	$16,629.00
	To Right of use asset		$16,629.00
	(To record amortization of asset)
31-Dec-21	Interest Expense Dr(68540-16629)*4%*1/2	$1038.00
	Lease Payable Dr	$16,962.00
	To Cash		$18,000.00
	(To record lease payment)
31-Dec-21	Amortization Expense Dr	$16,962.00
	To Right of use asset		$16,962.00
	(To record amortization of asset)

Journal Entries - ComputerWorld Leasing
Date	Particulars	Debit	Credit
30-Jun-21	Cash Dr	$18,000.00
	To Lease revenue		$18,000.00
	(To record lease revenue)
30-Jun-21	Depreciation Expense Dr ((106000-0)/5=$ 21200 =21200/2=$ 10600	$10,600.00
	To Accumulated depreciation		$10,600.00
	(To record depreciation)
31-Dec-21	Cash Dr	$18,000.00
	To Lease revenue		$18,000.00
	(To record lease revenue)
31-Dec-21	Depreciation Expense Dr	$10,600.00
	To Accumulated depreciation		$10,600.00
	(To record depreciation)