QUESTION 7 Eastern Edison Company leased equipment from Hi-Tech Leasing on Janua

Question

QUESTION 7 Eastern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2018 Other information Lease term 3 years Annual payments $80,000 on January 1 each year Life of asset 3 years Implicit interest rate 8% PV, annuity due, 3 periods, 8% 2.7833 PV, ordinary annuity. 3 periods, 8% 2.5771 Hi-Tech's cost of the equipment $222,664 There is no expected residual value s for Hi-Tech Leasing for 2018 and 2019. Assume a December 31 year-end. Round your answers to the nearest whole dollar amounts Click Saue and Submit to save and submit. Click Save All A

Explanation / Answer

Date Particulars Debit Credit Record the lease. Jan.1 2016 Lease receivable ($80,000 x 3) $240,000                  Unearned interest revenue (Difference) $17,336                  Inventory of equipment $222,664 Record the cash receipt for the annual payments. Cash $80,000          Lease Receivables $80,000 Record the entry for the interest revenue. Dec. 31 2016 Unearned interest revenue $11,413.12                 Interest Revenue $11,413.12 [($222,666 - $80,000) x 8%] Jan.1 2017 Record the cash receipt for the annual payments. Cash $80,000          Lease Receivables $80,000 Record the entry for the interest revenue. Dec. 31 2017 Unearned interest revenue $5,926.17                 Interest Revenue $5,926.17 [($222,666 - $80,000 - $68,586.88 *) x 8%] * ($80,000 - $11413.12) = 68586.88

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.