Question

Chance Enterprises leased equipment from Third Bank Leasing on January 1, 2021. Chance elected the short-term...

Chance Enterprises leased equipment from Third Bank Leasing on January 1, 2021. Chance elected the short-term lease option. Appropriate adjusting entries are made annually.

Related Information:
Lease term 1 year (12 monthly periods)
Monthly lease payments $52,000 at Jan. 1, 2021, through Dec. 1, 2021.
Economic life of asset 5 years
Interest rate charged by the lessor 6%


Required:
Prepare appropriate entries for Chance from the beginning of the lease through April 1, 2021

Business   Accounting   
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Answer #1
Answer

Date

 Account Titles Debit Credit
01-Jan No journal entry required
01-Apr Lease expense $52,000
     Cash $52,000
( To record the lease payment )
01-May Lease expense $52,000
     Cash $52,000
( To record the lease payment )
01-Jun Lease expense $52,000
     Cash $52,000
(To record the lease payment )
01-Jul Lease expense $52,000
     Cash $52,000
(To record the lease payment )
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