Question

On January 1, 2017, Salvatore Inc. leased several machines from Robert, LLP under a 1 year operating lease agreement. The lease calls for semiannual payments of $15,000 each, payable on June 30 and December 31 of each year. The machines were acquired by Robert at a cost of $90,000 and are expected to have a useful life of five years with no expected residual value. Prepare the appropriate journal entries for the lessee from the inception of the lease through the end of 2017.

**Does it matter if I use Rent Expense or Lease Expense account?** Thank you!

Answer 1

Solution:

Journal Entries - Salvatore Inc.
Date	Particulars	Debit	Credit
30-Jun-17	Rent Expense Dr	$15,000.00
	To Cash		$15,000.00
	(To record semiannual payment of rent on leased machine)
31-Dec-17	Rent Expense Dr	$15,000.00
	To Cash		$15,000.00
	(To record semiannual payment of rent on leased machine)

It does not matter if use rent expense or lease expense account. Name of account doesn't matter only nature of account matters.