Brief Exercise 21-9 Indiana Jones Corporation enters into a 6-year lease of equi
ID: 2468378 • Letter: B
Question
Brief Exercise 21-9 Indiana Jones Corporation enters into a 6-year lease of equipment on January 1, 2014, which requires 6 annual payments of $40,760 cach, beginning January 1, 2014. In addition, Indiana Jones guarantees the lessor a residual value of $18,240 at lease-end. The equipment has a useful life of 6 years. Prepare Indiana Jones' January 1, 2014, journal entries assuming an interest rate of 11%. (Credit accoun titles are automaticaly indented when amount is entered. Do not indent manually. Round preser value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal plac e.g. 58,971.)Explanation / Answer
Leased Equipment........................................................... 201,157
Lease Liability........................................................... 201,157
Calculation of PV:
PV of lease rentals $40,760 * 4.69590 = $191,405
PV of guaranteed residual value RV $18,240 * 0.53464 = 9,752
$201,157
Lease Liability................................................................... 40,760
Cash............................................................................ 40,760
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