Southwestern Edison Company leased equipment from Hi-Tech
Leasing on January 1, 2018. Hi-Tech manufactured the equipment at a
cost of $85,000.
|Lease term||4 years|
|Annual payments||$30,000 on January 1 each year|
|Life of asset||4 years|
|Fair value of asset||$105,939|
|Implicit interest rate||9%|
There is no expected residual value.
Prepare appropriate journal entries for Hi-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.)
|January 1||Lease receivable($30,000 x 4)||$120,000|
|Cost of goods sold||$85,000|
|Unearned interest revenue||$14,061|
|December 31||Unearned interest revenue[($105,939- $30,000 ) x 9%]||$6,835|
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