Hughey Co. as lessee records a capital lease of machinery on January 1, 2020. The seven annual lease payments of $875,000 are made at the end of each year. The present value of the lease payments at 10% is $4,260,000. Hughey uses the effective-interest method of amortization and sum-of-the-years’-digits depreciation (no residual value). (a) Prepare an amortization table for 2020 and 2021. (b) Prepare all of Hughey’s journal entries for 2020.
Hughey Co. as lessee records a capital lease of machinery on January 1, 2020. The seven annual lease payments of $875,000 are made at the end of each year. The present value of the lease payments at 10% is $4,260,000. Hughey uses the effective-interest method of amortization and sum-of-the-years’-digits depreciation (no residual value). (a) Prepare an amortization table for 2020 and 2021. (b) Prepare all of Hughey’s journal entries for 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hughey Co. as lessee records a capital lease of machinery on January 1, 2020. The seven annual lease payments of $875,000 are made at the end of each year. The present value of the lease payments at 10% is $4,260,000. Hughey uses the effective-interest method of amortization and sum-of-the-years’-digits
(a) Prepare an amortization table for 2020 and 2021.
(b) Prepare all of Hughey’s
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