The lease agreements are commonly of two types- Financial lease agreement and Operating lease agreement. Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return. Requirement 1: We have to determine the journal entry at the inception of lease.

Question

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Answer 1

Question

Chapter 14, Problem 11BPSB

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 1:

We have to determine the journal entry at the inception of lease.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease asset- Equipment	39000
	Lease Liability		39000
	( to record asset or liability at the inception of lease)

Explanation of Solution

At the inception of finance lease the lease asset account will get debited and lease liability account will get credited with the amount of annual lease payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance . In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 2:

We have to determine the journal entry at the time of cash payment.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease expense	14000
	Cash		14000
	( to record lease rent payment)

Explanation of Solution

At the time of finance lease cash payment lease expense account will get debited and cash account will get credited with the amount of cash payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 3:

We have to determine the journal entry for the amortization of asset.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 2	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 3	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Explanation of Solution

At the time of recording depreciation or amortization, depreciation(reduction of gross asset) account will get debited and depreciation expense account will get credited with the amount of depreciation.

Amount of depreciation is calculated by dividing 39000 by 3 i.e. value of five year lease payment divided by lease life.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 4:

We have to determine the journal entry at the time of cash lease payment at the end of year 1 and year 2.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Lease Liability	14000
	Interest	1975
	Cash		15975
	( to record lease rental payment)

Year 2	Lease Liability	14000
	Interest	1025
	Cash		15025
	( to record lease rental payment)

Explanation of Solution

At the time of lease rental payment at the end of year one, lease liability account and interest expense account will get debited with their respective amount and cash account will get credited with the total amount of lease liability and interest expense.

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Students have asked these similar questions

Martin Hughes earns net self-employment income of $157,100. He works a second job from which he receives FICA taxable earnings of $127,600.Self-Employment tax =

Question 2 U. Richards does not keep his books on the double entry system. His bank summary amount for 2010 is as follows: Balance 1.1.2010 1890 Receipts from $44656 debtors Creditors Loan from U. Miller $2.000 Rates Rent Drawings Cash withdrawn from bank $540 0 Payment to Trade $316 95 2750 1316 3095 1642 Sundry Expense Records of cash paid were sundry $122, trade creditors $642. Cash sales amounted to cash drawings were $5289. The following information is also available: 31.12.201 31.12.2 0 011 Cash in hand $48 $93 Trade creditors $4896 $5091 Accounts Receivables 60 $71 13 32 Rent Owing $250 Rates in Advance $282 $312 Motor van (at valuation) 2800 2400 Stock 11163 13021 Required: A. Statement of Affairs. (to find opening capital as at 31.12.2010) B. Cash Account & Bank Account. C. Accounts Receivables & Accounts Payables Control A/Cs. D. Income Statement for the year ended 31 December 2011.

2: Martin Hughes earns net self-employment income of $157,100. He works a second job from which he receives FICA taxable earnings of $127,600. Self-Employment tax = $ 6,440.70 3: Elisa Grant earns net self-employment income of $198,000. She works a second job from which she receives FICA taxable earnings of $100,400. Self-Employment tax = $ 30,294.00

Answer 2

Question

Chapter 14, Problem 11BPSB

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 1:

We have to determine the journal entry at the inception of lease.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease asset- Equipment	39000
	Lease Liability		39000
	( to record asset or liability at the inception of lease)

Explanation of Solution

At the inception of finance lease the lease asset account will get debited and lease liability account will get credited with the amount of annual lease payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance . In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 2:

We have to determine the journal entry at the time of cash payment.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease expense	14000
	Cash		14000
	( to record lease rent payment)

Explanation of Solution

At the time of finance lease cash payment lease expense account will get debited and cash account will get credited with the amount of cash payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 3:

We have to determine the journal entry for the amortization of asset.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 2	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 3	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Explanation of Solution

At the time of recording depreciation or amortization, depreciation(reduction of gross asset) account will get debited and depreciation expense account will get credited with the amount of depreciation.

Amount of depreciation is calculated by dividing 39000 by 3 i.e. value of five year lease payment divided by lease life.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 4:

We have to determine the journal entry at the time of cash lease payment at the end of year 1 and year 2.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Lease Liability	14000
	Interest	1975
	Cash		15975
	( to record lease rental payment)

Year 2	Lease Liability	14000
	Interest	1025
	Cash		15025
	( to record lease rental payment)

Explanation of Solution

At the time of lease rental payment at the end of year one, lease liability account and interest expense account will get debited with their respective amount and cash account will get credited with the total amount of lease liability and interest expense.

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Answer 3

Question

Chapter 14, Problem 11BPSB

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 1:

We have to determine the journal entry at the inception of lease.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease asset- Equipment	39000
	Lease Liability		39000
	( to record asset or liability at the inception of lease)

Explanation of Solution

At the inception of finance lease the lease asset account will get debited and lease liability account will get credited with the amount of annual lease payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance . In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 2:

We have to determine the journal entry at the time of cash payment.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease expense	14000
	Cash		14000
	( to record lease rent payment)

Explanation of Solution

At the time of finance lease cash payment lease expense account will get debited and cash account will get credited with the amount of cash payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 3:

We have to determine the journal entry for the amortization of asset.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 2	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 3	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Explanation of Solution

At the time of recording depreciation or amortization, depreciation(reduction of gross asset) account will get debited and depreciation expense account will get credited with the amount of depreciation.

Amount of depreciation is calculated by dividing 39000 by 3 i.e. value of five year lease payment divided by lease life.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 4:

We have to determine the journal entry at the time of cash lease payment at the end of year 1 and year 2.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Lease Liability	14000
	Interest	1975
	Cash		15975
	( to record lease rental payment)

Year 2	Lease Liability	14000
	Interest	1025
	Cash		15025
	( to record lease rental payment)

Explanation of Solution

At the time of lease rental payment at the end of year one, lease liability account and interest expense account will get debited with their respective amount and cash account will get credited with the total amount of lease liability and interest expense.

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Answer 4

Question

Chapter 14, Problem 11BPSB

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 1:

We have to determine the journal entry at the inception of lease.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease asset- Equipment	39000
	Lease Liability		39000
	( to record asset or liability at the inception of lease)

Explanation of Solution

At the inception of finance lease the lease asset account will get debited and lease liability account will get credited with the amount of annual lease payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance . In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 2:

We have to determine the journal entry at the time of cash payment.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease expense	14000
	Cash		14000
	( to record lease rent payment)

Explanation of Solution

At the time of finance lease cash payment lease expense account will get debited and cash account will get credited with the amount of cash payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 3:

We have to determine the journal entry for the amortization of asset.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 2	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 3	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Explanation of Solution

At the time of recording depreciation or amortization, depreciation(reduction of gross asset) account will get debited and depreciation expense account will get credited with the amount of depreciation.

Amount of depreciation is calculated by dividing 39000 by 3 i.e. value of five year lease payment divided by lease life.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 4:

We have to determine the journal entry at the time of cash lease payment at the end of year 1 and year 2.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Lease Liability	14000
	Interest	1975
	Cash		15975
	( to record lease rental payment)

Year 2	Lease Liability	14000
	Interest	1025
	Cash		15025
	( to record lease rental payment)

Explanation of Solution

At the time of lease rental payment at the end of year one, lease liability account and interest expense account will get debited with their respective amount and cash account will get credited with the total amount of lease liability and interest expense.

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Answer 5

Chapter 14, Problem 11BPSB

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 1:

We have to determine the journal entry at the inception of lease.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease asset- Equipment	39000
	Lease Liability		39000
	( to record asset or liability at the inception of lease)

Explanation of Solution

At the inception of finance lease the lease asset account will get debited and lease liability account will get credited with the amount of annual lease payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance . In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 2:

We have to determine the journal entry at the time of cash payment.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease expense	14000
	Cash		14000
	( to record lease rent payment)

Explanation of Solution

At the time of finance lease cash payment lease expense account will get debited and cash account will get credited with the amount of cash payment.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 3:

We have to determine the journal entry for the amortization of asset.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 2	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 3	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Explanation of Solution

At the time of recording depreciation or amortization, depreciation(reduction of gross asset) account will get debited and depreciation expense account will get credited with the amount of depreciation.

Amount of depreciation is calculated by dividing 39000 by 3 i.e. value of five year lease payment divided by lease life.

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 4:

We have to determine the journal entry at the time of cash lease payment at the end of year 1 and year 2.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Lease Liability	14000
	Interest	1975
	Cash		15975
	( to record lease rental payment)

Year 2	Lease Liability	14000
	Interest	1025
	Cash		15025
	( to record lease rental payment)

Explanation of Solution

At the time of lease rental payment at the end of year one, lease liability account and interest expense account will get debited with their respective amount and cash account will get credited with the total amount of lease liability and interest expense.

Answer 6

Chapter 14, Problem 11BPSB

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 1:

We have to determine the journal entry at the inception of lease.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease asset- Equipment	39000
	Lease Liability		39000
	( to record asset or liability at the inception of lease)

Explanation of Solution

At the inception of finance lease the lease asset account will get debited and lease liability account will get credited with the amount of annual lease payment.

Answer 7

Chapter 14, Problem 11BPSB

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 1:

We have to determine the journal entry at the inception of lease.

Answer 8

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease asset- Equipment	39000
	Lease Liability		39000
	( to record asset or liability at the inception of lease)

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

At the inception of finance lease the lease asset account will get debited and lease liability account will get credited with the amount of annual lease payment.

Answer 13

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance . In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 2:

We have to determine the journal entry at the time of cash payment.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease expense	14000
	Cash		14000
	( to record lease rent payment)

Explanation of Solution

At the time of finance lease cash payment lease expense account will get debited and cash account will get credited with the amount of cash payment.

Answer 14

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance . In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 2:

We have to determine the journal entry at the time of cash payment.

Answer 15

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

January 1	Lease expense	14000
	Cash		14000
	( to record lease rent payment)

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

At the time of finance lease cash payment lease expense account will get debited and cash account will get credited with the amount of cash payment.

Answer 20

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 3:

We have to determine the journal entry for the amortization of asset.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 2	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 3	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Explanation of Solution

At the time of recording depreciation or amortization, depreciation(reduction of gross asset) account will get debited and depreciation expense account will get credited with the amount of depreciation.

Amount of depreciation is calculated by dividing 39000 by 3 i.e. value of five year lease payment divided by lease life.

Answer 21

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 3:

We have to determine the journal entry for the amortization of asset.

Answer 22

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 2	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Year 3	Depreciation (Reduction of gross asset)	13000
	Depreciation expense		13000
	( to record asset depreciation)

Answer 23

Expert Solution

Answer 24

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

At the time of recording depreciation or amortization, depreciation(reduction of gross asset) account will get debited and depreciation expense account will get credited with the amount of depreciation.

Amount of depreciation is calculated by dividing 39000 by 3 i.e. value of five year lease payment divided by lease life.

Answer 27

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 4:

We have to determine the journal entry at the time of cash lease payment at the end of year 1 and year 2.

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Lease Liability	14000
	Interest	1975
	Cash		15975
	( to record lease rental payment)

Year 2	Lease Liability	14000
	Interest	1025
	Cash		15025
	( to record lease rental payment)

Explanation of Solution

At the time of lease rental payment at the end of year one, lease liability account and interest expense account will get debited with their respective amount and cash account will get credited with the total amount of lease liability and interest expense.

Answer 28

To determine

Concept Introduction:

The lease agreements are commonly of two types-

Financial lease agreement and

Operating lease agreement.

Financial lease agreement is a lease agreement or a way of providing finance. In this type of lease legal owner is the finance company for the duration of the lease and on the other hand lessee has operating control as well as substantial share of risk and return.

Requirement 4:

We have to determine the journal entry at the time of cash lease payment at the end of year 1 and year 2.

Answer 29

Expert Solution

Answer to Problem 11BPSB

Date	Particulars	Amount ($)	Amount($)

Year 1	Lease Liability	14000
	Interest	1975
	Cash		15975
	( to record lease rental payment)

Year 2	Lease Liability	14000
	Interest	1025
	Cash		15025
	( to record lease rental payment)

Answer 30

Expert Solution

Answer 31

Expert Solution

Answer 32

Expert Solution

Answer 33

Explanation of Solution

At the time of lease rental payment at the end of year one, lease liability account and interest expense account will get debited with their respective amount and cash account will get credited with the total amount of lease liability and interest expense.