Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $123,288. (FV of $1. PV of $1. FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis. Complete this question by entering your answers in the tabs below. Amort Schedule 01/01/2021 04/01/2021 07/01/2021 10/01/2021 Prepare a lease amortization schedule for the term of the lease for Manufacturers Southern. (Round your intermediate calculations and final answers to the nearest whole dollar) Payment Date 01/01/2022 04/01/2022 07/01/2022 General Journal 10/01/2022 Total 2 years (8 quarterly periods) $16,500 at the beginning of each period 2 years $123,288 8% Lease Payments Effective Interest Decrease in Balance < Amort Schedule Lease Balance General Journal >
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $123,288. (FV of $1. PV of $1. FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis. Complete this question by entering your answers in the tabs below. Amort Schedule 01/01/2021 04/01/2021 07/01/2021 10/01/2021 Prepare a lease amortization schedule for the term of the lease for Manufacturers Southern. (Round your intermediate calculations and final answers to the nearest whole dollar) Payment Date 01/01/2022 04/01/2022 07/01/2022 General Journal 10/01/2022 Total 2 years (8 quarterly periods) $16,500 at the beginning of each period 2 years $123,288 8% Lease Payments Effective Interest Decrease in Balance < Amort Schedule Lease Balance General Journal >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:# Lease Amortization and Journal Entries for Manufacturers Southern
**Background:**
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $123,288. To prepare the entries and calculate the lease amortization, use the following financial data:
- **Lease Information:**
- Lease Term: 2 years (8 quarterly periods)
- Quarterly Rental Payments: $16,508 at the beginning of each period
- Economic Life of Asset: 2 years
- Fair Value of Asset: $123,288
- Implicit Interest Rate: 8% (Also lessee's incremental borrowing rate)
**Required Tasks:**
1. Prepare a lease amortization schedule and appropriate journal entries for Manufacturers Southern from the beginning of the lease through January 1, 2022.
2. Amortize the right-of-use asset using a straight-line basis, recorded at the end of each fiscal year (December 31).
**Instructions:**
To complete the task, enter your answers in the provided tabs.
**Lease Amortization Schedule:**
- **Columns:**
- Payment Date
- Lease Payments
- Effective Interest
- Decrease in Balance
- Lease Balance
**Graph/Table Explanation:**
- **Payment Date:**
- Lists dates for each quarterly payment starting from 01/01/2021 to 10/01/2022.
- **Lease Payments:**
- Amount paid each quarter under the lease terms.
- **Effective Interest:**
- Interest amount calculated based on the outstanding balance and the implicit rate.
- **Decrease in Balance:**
- Reduction in the lease obligation after each payment, excluding interest.
- **Lease Balance:**
- Remaining balance of the lease obligation after each payment.
**Navigation:**
Use the "Amort Schedule" for updating or reviewing the payment schedule and click "General Journal" for adding the journal entries related to these transactions.
**Note:** Remember to round your intermediate calculations and final answers to the nearest whole dollar.
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