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Frontier Inc. enters into an eight-year lease contract to lease equipment with a useful life of eight years. Annual lease payments are due with the first payment made immediately on January 1, the commenceme of the lease. No residual value is expected or guaranteed for the underlying equipment. Lease payments consist of (a) fixed lease payment of $33,000, (b) insurance on the equipment of $1,000, and (c) maintenan on the equipment of $1,200. Frontier Inc. also paid legal fees of $850 related to the execution of the lease January 1. Prepare Frontier's three journal entries at the commencement of the finance lease to record (1) lease asset and liability, (2) lease payment, and (3) maintenance cost, assuming an implicit interest rate of 6%, known b Frontier. Note: Round your answers to the nearest whole dollar. Date Account Name 1) Jan. 1 Right-of-Use Asset Lease Liability Cash To record lease asset and liability 2) Jan. 1 Lease Liability Cash Dr. Cr. 238,940 0x 0 935 x 0 35,200 x v 34.000 0✔ v 0 34,000 ✔ To record cash lease payment 3) Jan. 1 Prepaid Maintenance Expense Cash To record cash maintenance payment 1,200 0✓ 0 1,200

Frontier Inc. enters into an eight-year lease contract to lease equipment with a useful life of eight years. Annual lease payments are due with the first payment made immediately on January 1, the commenceme of the lease. No residual value is expected or guaranteed for the underlying equipment. Lease payments consist of (a) fixed lease payment of $33,000, (b) insurance on the equipment of $1,000, and (c) maintenan on the equipment of $1,200. Frontier Inc. also paid legal fees of $850 related to the execution of the lease January 1. Prepare Frontier's three journal entries at the commencement of the finance lease to record (1) lease asset and liability, (2) lease payment, and (3) maintenance cost, assuming an implicit interest rate of 6%, known b Frontier. Note: Round your answers to the nearest whole dollar. Date Account Name 1) Jan. 1 Right-of-Use Asset Lease Liability Cash To record lease asset and liability 2) Jan. 1 Lease Liability Cash Dr. Cr. 238,940 0x 0 935 x 0 35,200 x v 34.000 0✔ v 0 34,000 ✔ To record cash lease payment 3) Jan. 1 Prepaid Maintenance Expense Cash To record cash maintenance payment 1,200 0✓ 0 1,200

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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am. 121.

Frontier Inc. enters into an eight-year lease contract to lease equipment with a useful life of eight years. Annual lease payments are due with the first payment made immediately on January 1, the commencemen of the lease. No residual value is expected or guaranteed for the underlying equipment. Lease payments consist of (a) fixed lease payment of $33,000, (b) insurance on the equipment of $1,000, and (c) maintenance on the equipment of $1,200. Frontier Inc. also paid legal fees of $850 related to the execution of the lease or January 1. Prepare Frontier's three journal entries at the commencement of the finance lease to record (1) lease asset and liability, (2) lease payment, and (3) maintenance cost, assuming an implicit interest rate of 6%, known by Frontier. Note: Round your answers to the nearest whole dollar. Date Account Name 1) Jan. 1 Right-of-Use Asset Lease Liability Cash To record lease asset and liability 2) Jan. 1 Lease Liability Cash v Dr. Cr. 238,940 0x 0 935 x 0 35,200 x Y 34,000 0✓ ▼ 0 34,000 ✔ v 1,200 0 0 1,200 To record cash lease payment 3) Jan. 1 Prepaid Maintenance Expense Cash To record cash maintenance payment
Transcribed Image Text:Frontier Inc. enters into an eight-year lease contract to lease equipment with a useful life of eight years. Annual lease payments are due with the first payment made immediately on January 1, the commencemen of the lease. No residual value is expected or guaranteed for the underlying equipment. Lease payments consist of (a) fixed lease payment of $33,000, (b) insurance on the equipment of $1,000, and (c) maintenance on the equipment of $1,200. Frontier Inc. also paid legal fees of $850 related to the execution of the lease or January 1. Prepare Frontier's three journal entries at the commencement of the finance lease to record (1) lease asset and liability, (2) lease payment, and (3) maintenance cost, assuming an implicit interest rate of 6%, known by Frontier. Note: Round your answers to the nearest whole dollar. Date Account Name 1) Jan. 1 Right-of-Use Asset Lease Liability Cash To record lease asset and liability 2) Jan. 1 Lease Liability Cash v Dr. Cr. 238,940 0x 0 935 x 0 35,200 x Y 34,000 0✓ ▼ 0 34,000 ✔ v 1,200 0 0 1,200 To record cash lease payment 3) Jan. 1 Prepaid Maintenance Expense Cash To record cash maintenance payment
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