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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
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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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 Problem 10-11AC Part 1 View transaction list 1 (A) Beginning Balance of Lease Liability Journal entry worksheet $76,300 49,572 25,412 Note: Enter debits before credits. 1. Prepare the January 1 journal entry at the start of the lease to record any asset or liability. Date Year 1 Jan 01 (8) Debit Interest on Lease Liability 6.003% $ (A) 0 General Journal 2,568 1,316 $ 3,884 Record the journal entry for any asset or liability at the start of the lease. Payments (C) Debit Lease Liability (D) (8) $26,728 24,160 25,412 $76,300 Debit Credit (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
Transcribed Image Text: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 Problem 10-11AC Part 1 View transaction list 1 (A) Beginning Balance of Lease Liability Journal entry worksheet $76,300 49,572 25,412 Note: Enter debits before credits. 1. Prepare the January 1 journal entry at the start of the lease to record any asset or liability. Date Year 1 Jan 01 (8) Debit Interest on Lease Liability 6.003% $ (A) 0 General Journal 2,568 1,316 $ 3,884 Record the journal entry for any asset or liability at the start of the lease. Payments (C) Debit Lease Liability (D) (8) $26,728 24,160 25,412 $76,300 Debit Credit (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 Part 2 2. Prepare the January 1 journal entry to record the first $26,728 cash lease payment. View transaction list Journal entry worksheet < 1 Record the first lease payment on January 1. Note: Enter debits before credits. Date Year 1 Jan 01 Record entry Show Transcribed Text Problem 10-11AC Part 3 < View transaction list Journal entry worksheet Note: Enter debits before credits Date Year 1 Dec 31 3. Prepare the December 31 journal entry to record straight-line amortization with zero salvage value at the end of (a) Year 1, (b) Year 2, and (c) Year 3. Record amortization of right-of use asset at December 31 of the first year. Record entry Problem 10-11AC Part 4 Show Transcribed Text View transaction list < 1 General Journal Journal entry worksheet 2 General Journal Date Year 1 Dec 31 Clear entry Clear entry Note: Enter debits before credits. Record entry Record lease payment on December 31 of the first year. 3 4. Prepare the December 31 journal entry to record the $26,728 cash lease payment at the end of (a) Year 1 and (b) Year 2 General Journal Debit Clear entry 3 Debit Credit C View general journal Debit Credit View general journal Credit View general journal
Transcribed Image Text:Problem 10-11AC Part 2 2. Prepare the January 1 journal entry to record the first $26,728 cash lease payment. View transaction list Journal entry worksheet < 1 Record the first lease payment on January 1. Note: Enter debits before credits. Date Year 1 Jan 01 Record entry Show Transcribed Text Problem 10-11AC Part 3 < View transaction list Journal entry worksheet Note: Enter debits before credits Date Year 1 Dec 31 3. Prepare the December 31 journal entry to record straight-line amortization with zero salvage value at the end of (a) Year 1, (b) Year 2, and (c) Year 3. Record amortization of right-of use asset at December 31 of the first year. Record entry Problem 10-11AC Part 4 Show Transcribed Text View transaction list < 1 General Journal Journal entry worksheet 2 General Journal Date Year 1 Dec 31 Clear entry Clear entry Note: Enter debits before credits. Record entry Record lease payment on December 31 of the first year. 3 4. Prepare the December 31 journal entry to record the $26,728 cash lease payment at the end of (a) Year 1 and (b) Year 2 General Journal Debit Clear entry 3 Debit Credit C View general journal Debit Credit View general journal Credit View general journal
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