213.8/2 wer leased high-tech electronic equipment from Kolten Leasing on January

Question

213.8/2 wer leased high-tech electronic equipment from Kolten Leasing on January 1, 2018. Kolten purchased the equipment from Wong Machines at a cost of $255,000, its fair value. (FV of $1, PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease terrm 2 years (8 quarterly periods) $20,080 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter 5 years d Quarterly lease payments Economic life of asset Interest rate charged by the lessor 12% Required Prepare a lease amortization schedule and ppropriate entries for Grichuk Power from the commencement of the lease through fiscal year end for each company Appropriate adjusting entries are recorded at the end of for Grich each quarter Complete this question by entering your answers in the tabs below. Amort General Schedule Record the appropriate adjusting entries at the end of each quarter for Grichuk Power from the commencement of the lease through January 1, 2018. December 31 is the fiscal year end for each company. (If no entry is required for a transa ction/event, select "No journal entry required' in the first account field.) Credit Date General Journal January 01,

Explanation / Answer

Annual Interest Rate=12% Quarterly interest rate 3% 0.03 Quarterly payment $20,000 Number of quarters of lease 8 Present Value of payments $144,605.66 (Using PV function of excel with Rate =3%, Nper=4, Pmt=-20000,Type 1) AMORTIZATION SCHEDULE A B C=A*0.03 D=B-C E=A-D Payment Number Payment Date Opening Balance Total payment Interest expense Lease Payment Closing Balance 0 January.1, 2018 $144,605.66 $20,000 $0.00 $20,000.00 $124,605.66 1 March.31, 2018 $124,605.66 $20,000 $3,738.17 $16,261.83 $108,343.83 2 June.30, 2018 $108,343.83 $20,000 $3,250.31 $16,749.69 $91,594.14 3 Septr.30, 2018 $91,594.14 $20,000 $2,747.82 $17,252.18 $74,341.97 4 Dec.31, 2018 $74,341.97 $20,000 $2,230.26 $17,769.74 $56,572.23 5 March.31, 2019 $56,572.23 $20,000 $1,697.17 $18,302.83 $38,269.39 6 June.30, 2019 $38,269.39 $20,000 $1,148.08 $18,851.92 $19,417.48 7 Sep.30, 2019 $19,417.48 $20,000 $582.52 $19,417.48 ($0.00) JOURNAL ENTRY No. Date General Journal Debit Credit 1 January .1,2018 Equipment $144,605.66 Lease Payable $144,605.66 2 January .1,2018 Lease Payable $20,000 Cash $20,000 March.31, 2018 Lease payable $16,261.83 Interest expense $3,738.17 Cash $20,000 June.30, 2018 Lease payable $16,749.69 Interest expense $3,250.31 Cash $20,000.00 Septr.30, 2018 Lease payable $17,252.18 Interest expense $2,747.82 Cash $20,000.00 Dec.31, 2018 Lease payable $17,769.74 Interest expense $2,230.26 Cash $20,000.00

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