Question

Host Co as a lessor records a sales type lease of machinery on 1/1/19. The 7 annual lease payments of $210,000 are received at the end of each year. The present value of the lease payments at 10% is $1,022,400.

Prepare a lease amortization schedule from 1/1/19 to 12/31/21.

Prepare the journal entries for Host from 1/1/19 to 12/31/20.

SHOW ALL COMPUTATIONS.

Answer 1

Answer:

1
	Period	Lease Payment	Interest Exp.	Principal	Ending Balance
	1/1/19				$1,022,400
	12/31/19	$210,000	$102,240	$107,760	$914,640
	12/31/20	$210,000	$91,464	$118,536	$796,104
	12/31/21	$210,000	$79,610	$130,390	$665,714
	12/31/22	$210,000	$66,571	$143,429	$522,286
	12/31/23	$210,000	$52,229	$157,771	$364,514
	12/31/24	$210,000	$36,451	$173,549	$190,966
	12/31/25	$210,000	$19,097	$190,965	$0
2
Date	Accounts Titles and Explanation	Debit	Credit
1/1/19	Leased Assets	$1,022,400
	Lease Liability		$1,022,400
12/31/19	Interest Expense	$102,240
	Lease Liability	$107,760
	Cash		$210,000
12/31/20	Interest Expense	$91,464
	Lease Liability	$118,536
	Cash		$210,000