On January 1, 2024, QuickStream Communications leased telephone equipment from Digium, Incorporated Digium’s cash selling price for the equipment is $1,618,008. The lease agreement specifies six annual payments of $350,000 beginning December 31, 2024, and on each December 31 thereafter through 2029. The six-year lease is equal to the estimated useful life of the equipment. The contract specifies that lease payments for each year will increase by the higher of (a) the increase in the Consumer Price Index for the preceding year or (b) 2%. The CPI at the beginning of the lease is 140. Digium routinely leases equipment to other firms. The interest rate in these lease arrangements is 8%. Required: Prepare the appropriate journal entries for QuickStream to record the lease at its beginning date of January 1, 2024.
On January 1, 2024, QuickStream Communications leased telephone equipment from Digium, Incorporated Digium’s cash selling price for the equipment is $1,618,008. The lease agreement specifies six annual payments of $350,000 beginning December 31, 2024, and on each December 31 thereafter through 2029. The six-year lease is equal to the estimated useful life of the equipment. The contract specifies that lease payments for each year will increase by the higher of (a) the increase in the Consumer Price Index for the preceding year or (b) 2%. The CPI at the beginning of the lease is 140. Digium routinely leases equipment to other firms. The interest rate in these lease arrangements is 8%.
Required:
Prepare the appropriate journal entries for QuickStream to record the lease at its beginning date of January 1, 2024.
Note: If no entry is required for a transaction/event, select "No
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