Chapter 14, Problem 19QS

To determine

Concept Introduction:

Operating Leases:

Under Operating lease, the lessee uses the asset leased from the lessor on rental basis without the title or ownership of the leased asset. It means that the ownership of asset remains with the lessor. The usage of asset by lessee is unrestricted for specific time period as per the terms of lease period and lessee is responsible for the condition of an asset at the end of the lease period. Operating lease is short term in nature and usually cancellable before the lifetime of the leased asset.

The lease amount is an operating expense which is debited in the name of rental expense or lease expense and cash is credited accordingly.

To discuss:

The journal entry to record the short-term car lease cost in the books of ETrain.com.