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cation.comytlow/connect.html Blackboard Learn P Pace university's My Login l Sallie Mae Home-FAFSA on th NYS Higher Educatio m pay Gas National Gri 204 Rent Ho eview part 2 6 Saved Help On January 1, 2018, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2021, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $433,521 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2018, to be $69,000. Negotiations led to Maywood guaranteeing a $98,500 residual value. Equal payments under the lease are $138,000 and are due on December 31 of each year with the first payment being made on December 31, 2018. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments (ryoseyati EVAof $1. PVA of S1. FVAD of $1 and PVAD of $1) (Use appropriate factorfs) from the tables provided.) Required: 1. & 2. Prepare the appropriate entries for Maywood on January 12018 and December 31, 2018, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the beginning of the lease for Maywood Hydraulics Note: Enter debits before credits Prex 2 of5 Next

Explanation / Answer

Nature of transaction Year Cash flow PVIF@7% Present Value of minimum lease payments Interest 0 1 Annual equal payments 1 138000 0.934579439 128971.96 9028.04 Annual equal payments 2 138000 0.873438728 120534.54 17465.46 Annual equal payments 3 138000 0.816297877 112649.11 25350.89 Gauranteed Residual value 3 98500 0.816297877 80405.34 Total 442560.96 Depreication on leased asset = present value of minimum lease payments/No. of years for which asset is leased       = =442560.96/3 years 147520.32 Amount in $ Date General Journal Debit Credit January 1, 2018 Leased Asset 442560.96 Leased Liability 442560.96 To record the inception of lease December 31, 2018 Leased Liability 128971.96 Interest/Finance charges 9028.04 Cash 138000.00 To record the first installment on lease December 31, 2018 Depreication on Leased asset 147520.32 Accumulated depreciation on leased asset 147520.32 To record the depreciation on leased asset

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