Amy Co. as lessee records a finance lease of machinery on January 1, 2019. The s

Question

Amy Co. as lessee records a finance lease of machinery on January 1, 2019. The seven annual lease payments of $925,000 are made at the beginning of each year. The present value of the lease payments at 6% is $5,473,521. Amy uses the effective-interest method of amortization and straight-line depreciation (no residual value).

III. Lease proble m - Finance lease amortization and journal entries Amy Co. as lessee records a finance lease of machinery on January 1, 2019. The seven annual lease payments of $925,000 are made at the beginning of each year. The present value of the lease payments at 6% is $5,473,521. Amy uses the effective-interest method of amortization and straight-line depreciation (no residual value). Instructions (Round to the nearest dollar.) Prepare an amortization table for 2019 and 2020 Prepare all of Hughey's journal entries for 2019

Explanation / Answer

Part A

328411

(6%*5473521)

596589

(925000-328411)

292616

(6%*4876932)

632384

(925000-292616)

Part B

Date annual payments interest expense reduction of liability lease liability 1/1/2019 5473521 12/31/2019 925000

328411

(6%*5473521)

596589

(925000-328411)

4876932 12/31/2020 925000

292616

(6%*4876932)

632384

(925000-292616)

4244548

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