Brief Exercise 21-2 Nash Company leased equipment from Costner Company. The leas

Question

Brief Exercise 21-2 Nash Company leased equipment from Costner Company. The lease term is S years and requires equal rental payments of $46,558 at the beginning of each year. The equipment has a fair value at the inception of the lease of $191,000, ar estimated useful life of S years, and no salvage value. Nash pays all executory costs directly to third parties. The appropriate interest rate is 11%. Prepare Nash's January 1, 2017, journal entries at the inception of the lease. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit January 1, 2017 To recard the lease.) January 1, 2017 (To record first lease payment.)

Explanation / Answer

SOLUTION

Exercise 21-2

Date Account titles and Explanation Debit ($) Credit ($) Jan.1, 2017 Leased Equipment 191,000 Lease Liability 191,000 (To record the lease) Jan.1, 2017 Lease Liability 46,558   Cash 46,558 (To record first lease payment)

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