Brief Exercise 21-9 Sheridan Corporation enters into a S-year lease of equipment

Question

Brief Exercise 21-9 Sheridan Corporation enters into a S-year lease of equipment on January 1, 2017, which requires 5 annual payments of $43,200 each, beginning January 1, 2017. In addition, Sheridan guarantees the lessor a residual va of $18,000 at lease-end. The equipment has a useful life of 5 years prepare Sheridan,January 1, 2017, journal entries assuming an inter strate of 96 (Cr dit. Debit Credit Date January 1, 2017 (To record the lease.) January 1, 2017 To record first lease payment.) if you would like to Show Work for this question: pen Show Work SHOW LIST OF ACCOURETS

Explanation / Answer

Recording of Lease:

Recording of 1st Lease payment

Year Lease Rental & Salvage PVIF PV of Lease Rental 0                         43,200                 1.0000              43,200 1                         43,200                 0.9174              39,633 2                         43,200                 0.8417              36,361 3                         43,200                 0.7722              33,358 4                         43,200                 0.7084              30,604 5                         18,000                 0.6499              11,699 Total          1,94,855

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