**Educational Content: Journal Entry Preparation for Lease Agreement****Scenario:**On January 1, 2021, North-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing. ComputerWorld Leasing routinely finances equipment for similar firms at an annual interest rate of 8%. The contract calls for four rent payments of $15,863, with these payments due semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $97,800 and were expected to have a useful life of five years with no residual value. Both firms recognized lease amortization and depreciation at the end of each fiscal year, December 31. **Relevant Accounting Standards:**- FASB (Financial Accounting Standards Board) requirements- ASC 842 (Leases)- Topics ASC 840/842**Required:**1. **Prepare Appropriate Journal Entries Recorded by North-Langstrom Services for the First Year of the Lease.**2. **Prepare Appropriate Journal Entries Recorded by ComputerWorld Leasing for the First Year of the Lease.**---**Instructions:**Begin by preparing journal entries as North-Langstrom Services for the first year of the lease. Use the provided journal entry worksheet to record each entry, specifying the date, general journal, debit amounts, and credit amounts.### **Journal Entry Worksheet:**The worksheet accommodates up to five entries:- **Data Input Fields:** - **Date:** Date of the transaction - **General Journal Columns:** - **Debit:** Enter amounts for assets and expenses increases. - **Credit:** Enter amounts for liabilities, equity, and revenue increases.- **Transaction Recording:** - **January 01, 2021:** Initial lease setup - **June 30, 2021 and December 31, 2021:** Lease payment transactionsThe worksheet allows you to:- Record each entry sequentially.- Clear any existing entries to start over.- View a comprehensive list of journal entries to ensure accuracy.Upon completion, ensure all calculations and amounts are rounded as needed.**Note:** Use the tab navigation at the bottom to switch between required tasks. This exercise provides a practical application of working with operating leases under the accounting standards and improves understanding of how to handle financial transactions related to leasing agreements.

Solution A journal is a company's official book in which a company's or business's recorded their…

On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Lessing, which routinely finances equipment for other firms at an annual Interest rate of 4%. The contract calls for four rent payments of $13,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $97,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually. (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.) Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lesse. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. (Round your intermediate calculations and final answers to the nearest whole dollar.) Vww transaction lat Journal entry worksheet < Record the beginning of the lease for Nath-Langstrom Services. 3 Note: Enter debts before credits Date January 01, 2021 Macord entry General Journal Clear entry < Required 1 Debit Credit View general journal Required 2 > >

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q