Problem 10-11AC Accounting for finance lease LO C3 [The following information applies to the questions displayed below] On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $26,728 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $76,300, using a 5.180 % interest rate. The lease payment schedule follows. Date Jan. 1, Year 1 Dec. 31, Year 1 Dec. 31, Year 2 (A) Beginning Balance of Lease Liability $76,300. 49,572 25,412 View transaction list (B) Debit Interest on Lease Liability 6.003% X (A) $ 0 2,568 1,316 $ 3,884 Payments (C) Debit Lease Liability (D) (8) $26,728 24,160 25,412 $76,300 Problem 10-11AC Part 1 1. Prepare the January 1 journal entry at the start of the lease to record any asset or liability. (D) Credit Cash Lease. Payment $26,728 26,728 26,728 $80,184 (E) Ending Balance of Lease Liability (A) (C) $49,572 25,412 0

Problem 10-11AC Accounting for finance lease LO C3 [The following information applies to the questions displayed below] On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $26,728 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $76,300, using a 5.180 % interest rate. The lease payment schedule follows. Date Jan. 1, Year 1 Dec. 31, Year 1 Dec. 31, Year 2 (A) Beginning Balance of Lease Liability $76,300. 49,572 25,412 View transaction list (B) Debit Interest on Lease Liability 6.003% X (A) $ 0 2,568 1,316 $ 3,884 Payments (C) Debit Lease Liability (D) (8) $26,728 24,160 25,412 $76,300 Problem 10-11AC Part 1 1. Prepare the January 1 journal entry at the start of the lease to record any asset or liability. (D) Credit Cash Lease. Payment $26,728 26,728 26,728 $80,184 (E) Ending Balance of Lease Liability (A) (C) $49,572 25,412 0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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