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C Co. bought equipment to lease for $50,000 on 1/1/20. Incurred $5,000 of expenses during 2020 for the equipment. Depreciated the equipment for 10 years at straight line depreciation method and no salvage value. Received a payment of $5,000 on 1/1/20 from the lessee PQ Co. PQ Co. recorded the lease for $50,900 on 1/1/20. At the end of 2020 recorded the lease expenses for $5,000 with interest expense of $2,000 and amortization of $3,000. Journalize all necessary entries for ABC Co. and PQ Co. for 2020.

C Co. bought equipment to lease for $50,000 on 1/1/20. Incurred $5,000 of expenses during 2020 for the equipment. Depreciated the equipment for 10 years at straight line depreciation method and no salvage value. Received a payment of $5,000 on 1/1/20 from the lessee PQ Co. PQ Co. recorded the lease for $50,900 on 1/1/20. At the end of 2020 recorded the lease expenses for $5,000 with interest expense of $2,000 and amortization of $3,000. Journalize all necessary entries for ABC Co. and PQ Co. for 2020.

FINANCIAL ACCOUNTING
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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ABC Co. bought equipment to lease for $50,000 on 1/1/20. Incurred $5,000 of expenses during 2020 for the equipment. Depreciated the equipment for 10 years at straight line depreciation method and no salvage value. Received a payment of $5,000 on 1/1/20 from the lessee PQ Co. PQ Co. recorded the lease for $50,900 on 1/1/20. At the end of 2020 recorded the lease expenses for $5,000 with interest expense of $2,000 and amortization of $3,000. Journalize all necessary entries for ABC Co. and PQ Co. for 2020.

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