CALCULATOB MESSAGE HY INSTRICIOR .O FULL SCREEN | pR?NTER VERSION : BACK ! Brief

Question

CALCULATOB MESSAGE HY INSTRICIOR .O FULL SCREEN | pR?NTER VERSION : BACK ! Brief Exercise 21-3 Novak Corporation recorded a capita ease at $227 200 on lanuary 1, 2017. The interest rate is 13%, Novak Corporation made the fret i ase eayment a eneos an i The equipment has a useful life of 8 years with no salvage value. ua y i ara i e re re i usv Prepare Novak Corporation's December 31, 2017 adjusting entries. (Credit account tites are automatically indented when omount is entered. Do not indent manuaily.If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round answers to o decimal places e.g. 125.) Date Account Titles and Explanation Debit Credit December 31, 2017 To record interest expense.) December 31, 2017 (To record depreciation.) Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT By accessing this Question on Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor wil Version 4.24.6 All Rights Reseived. A Division of listunitidsasnm 2030130+N10020 1025 PM 4/24/2013 ^ do, Di

Explanation / Answer

First annual lease payment = 41899

Interest expense portion in 1st year of lease payment = 227200*13% = 29536

Principal portion in lease payment of 1st year = 41899 - 29536 = 12363

Journal entry as on December 31,2017 to record interest expense:

Lessor Account Dr 12363

Interest expense Dr 29536

Cash Cr 41899

Journal entry as on December 31,2017 to record depreciation expense:

Depreciation per year = 227200/8 = 28400

Journal entry:

Depreciation Dr 28400

Asset on lease Cr 28400

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