Leased assets On January 1, 2021, the chief operating officer of New Belgium, Jeff Stambaugh, signed a noncancellable lease for street equipment. The lease was for 10 years. The present value of payments expected to be made during the lease is $75,152. The township’s incremental borrowing rate is 7 percent. The $10,000 annual lease payment is due on the first day of each year beginning in 2021. Prepare all journal entries necessary to record the lease transaction for 2021 and the payment made in 2022. (Assume the government uses a voucher system.)
Leased assets On January 1, 2021, the chief operating officer of New Belgium, Jeff Stambaugh, signed a noncancellable lease for street equipment. The lease was for 10 years. The present value of payments expected to be made during the lease is $75,152. The township’s incremental borrowing rate is 7 percent. The $10,000 annual lease payment is due on the first day of each year beginning in 2021. Prepare all journal entries necessary to record the lease transaction for 2021 and the payment made in 2022. (Assume the government uses a voucher system.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Leased assets
On January 1, 2021, the chief operating officer of New Belgium, Jeff Stambaugh, signed a noncancellable lease for street equipment. The lease was for 10 years.
The present value of payments expected to be made during the lease is $75,152. The township’s incremental borrowing rate is 7 percent. The $10,000 annual lease payment is due on the first day of each year beginning in 2021.
Prepare all
(Assume the government uses a voucher system.)
Transcribed Image Text:2021
2022
General fund
To record long-term lease
Account
To record vouchers payable
To pay liability
To record vouchers payable
(Note: Round to the nearest dollar.)
To pay liability
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Debit
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Credit
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