12. Brandy Bottling signs an agreement on January 1, 20X4, to lease office equipment for a 5-year period. The estimated useful life of the office equipment is 8 years. The market value of the office equipment is $235,000. The lease agreement calls for lease payments of $55,040. The first payment is due on December 31, 20X4, all subsequent payments are made each December 31 thereafter. The interest rate stated in the lease agreement is 8%. The present value of the lease payments is $219,758. At the end of the lease term, the equipment reverts back to the lessor. Prepare journal entries to record a. the lease agreement on January 1, 20X4. b. the first lease payment on December 31, 20X4. c. the amortization of the leased asset on December 31, 20X4.

12. Brandy Bottling signs an agreement on January 1, 20X4, to lease office equipment for a 5-year period. The estimated useful life of the office equipment is 8 years. The market value of the office equipment is $235,000. The lease agreement calls for lease payments of $55,040. The first payment is due on December 31, 20X4, all subsequent payments are made each December 31 thereafter. The interest rate stated in the lease agreement is 8%. The present value of the lease payments is $219,758. At the end of the lease term, the equipment reverts back to the lessor. Prepare journal entries to record a. the lease agreement on January 1, 20X4. b. the first lease payment on December 31, 20X4. c. the amortization of the leased asset on December 31, 20X4.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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