Question

Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $311,208. other information: Lease term Annual payments Life of asset Fair value of asset 4 years $87,000 on January 1 each year 4 years $311,208 Implicit interest rate Incremental rate There is no expected residual value. Required: Prepare appropriate journal entries for Low-Tech Leasing for 2018. Assume a December 31 year-end. (If no for a transaction/event, select "No journal entry required" in the first account field. Round your whole dollar amounts.) entry is required answers to the nearest View transaction list Journal entry worksheet 3 Record the entry at the inception of the lease Note: Enter debits before credits Credit Debit General Journal Date January 01,2018

Answer 1

General Journal Credit Date Lease Receivable ($87,000 *4) 348,000 Unearned Interest Revenue 2018 36,792 311,208 87,000 17,936.64 Equipment Inventory Cash 87,000 January 1, 2018 December 31, 2018 Lease Receivable Unearned interest Revenue [($311,208-$87,000) *8%) | 17,936.64 Interest Revenue