Manufacturers Southern leased high-tech electronic equipment from Edision Leasin

Question

Manufacturers Southern leased high-tech electronic equipment from Edision Leasing on January 1, 2013 Edison purchased the equipment from International Machines at a cost of $127,650 (FV of $1, FV of $1 PV of $1 FVA, PVA of $1 FVAD of $1 and PVAD of $1 (Use appropriate factors(s) from the tables provided.) Required: Prepare a lease amortization schedule for the term of the lease. Also record the appropriate entries for manufacturers Southern front the inception of the lease through January 1 2014 Deprecation is recorded at the end of each fiscal year (December 31) on a straight-line basis (If no entry is required rot a particular transaction, select No journal entry required in the first account field account field. Enter your answers in whole dollars.)

Explanation / Answer

Part 1)

Lease amortization schedule is given below:

___________

Part 2)

The journal entries for the period 1st January 2013 to 1st January 2014 (as required in the question) are given below:

Payment Number Payments (A) Effective Interest at 1.5% (6%/4) of Outstanding Balance (B) Decrease in Balance (A-B) Outstanding Balance 127,650 1 16,800 16,800 110,850 2 16,800 1,663 15,137 95,713 3 16,800 1,436 15,364 80,348 4 16,800 1,205 15,595 64,754 5 16,800 971 15,829 48,925 6 16,800 734 16,066 32,859 7 16,800 493 16,307 16,552 8 16,800 248 16,552 0 Totals $134,400 $6,750 $127,650

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