Windsor Corporation recorded a right-of-use asset for $240,300 as a result of a

Question

Windsor Corporation recorded a right-of-use asset for $240,300 as a result of a finance lease on December 31, 2016. Windsor’s incremental borrowing rate is 13%, and the implicit rate of the lessor was not known at the commencement of the lease. Windsor made the first lease payment of $41,440 on on December 31, 2016. The lease requires 9 annual payments. The equipment has a useful life of 9 years with no residual value. Prepare Windsor's December 31, 2017, entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.)

Explanation / Answer

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Journal Entries date Particulars Debit Credit 31/03/17 Accounts payable $36,673 Interest Expense $4,767 To Bank $41,440 (being instalment paid) 31/03/17 Depreciation Expense $26,700 =($240,300/9) To Asset $26,700 (Being depreciation expnese recroded)

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