On January 1, 2021, Rick's Pawn Shop leased a truck from Corey Motors for a seven-year period with an option to extend the lease for three years. Rick's had no significant economic Incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $16,500 due on December 31 of each year, calculated by the lessor using a 4% Interest rate. The agreement is considered an operating lease. (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 Rick's Journal entry to record for the right-of-use asset and lease llability at January 1, 2021. 2. Prepare the journal entries to record Interest and amortization at December 31, 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare Rick's journal entry to record for the right-of-use asset and lease liability at January 1, 2021. (If no entry is requir transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole do View transaction list Journal entry worksheet र 1 Record the beginning of the lease for Rick's. Note: Enter debits before credits. Date January 01, 2021 General Journal Debit Credit
On January 1, 2021, Rick's Pawn Shop leased a truck from Corey Motors for a seven-year period with an option to extend the lease for three years. Rick's had no significant economic Incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $16,500 due on December 31 of each year, calculated by the lessor using a 4% Interest rate. The agreement is considered an operating lease. (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 Rick's Journal entry to record for the right-of-use asset and lease llability at January 1, 2021. 2. Prepare the journal entries to record Interest and amortization at December 31, 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare Rick's journal entry to record for the right-of-use asset and lease liability at January 1, 2021. (If no entry is requir transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole do View transaction list Journal entry worksheet र 1 Record the beginning of the lease for Rick's. Note: Enter debits before credits. Date January 01, 2021 General Journal Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 1P: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Ballieu Company leases...
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Transcribed Image Text:On January 1, 2021, Rick's Pawn Shop leased a truck from Corey Motors for a seven-year period with an option to
extend the lease for three years. Rick's had no significant economic Incentive as of the beginning of the lease to
exercise the 3-year extension option. Annual lease payments are $16,500 due on December 31 of each year,
calculated by the lessor using a 4% Interest rate. The agreement is considered an operating lease. (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 Rick's Journal entry to record for the right-of-use asset and lease llability at January 1, 2021.
2. Prepare the Journal entries to record Interest and amortization at December 31, 2021.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare Rick's journal entry to record for the right-of-use asset and lease liability at January 1, 2021. (If no entry is requir
transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole do
View transaction list
Journal entry worksheet
{
1
Record the beginning of the lease for Rick's.
Note: Enter debits before credits.
Date
January 01, 2021
General Journal
Debit
Credit
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