Question

Illini leases another piece of equipment from Cubs Corporation under a four-year lease agreement on 1/1/20x1....

Illini leases another piece of equipment from Cubs Corporation under a four-year lease agreement on 1/1/20x1. The lease specifies annual payments on each 1/1 and the first payment of $10,000 is made on 1/1/20x1. The lease also specifies a 3% annual increase in the lease payments. The equipment has a fair value of $100,000 on 1/1/20x1. The expected useful life of the equipment is 10 years with no residual value. The equipment will be returned to Cubs at the end of the lease term. The implicit rate is 10%.

Date Account Name (Debit) Account Name (Credit) Debit Credit
1/1/20X1 ROU assets [A]
Lease obligation [B]
1/1/20X1 Lease obligation [C]
Cash [D]
12/31/20X1 Rental expense [E]
Accrued interest [F]
ROU assets [G]
1/1/20X2 Lease obligation [H]
Accrued interest [I]
Cash [J]
12/31/20X2 Rental expense [K]
Accrued interest [L]
ROU assets [M]

So far, i know that on 1/1/20x1 for A and B the amount is 36341 USD.

For C and D - 10000 USD.

For F - 2634 USD

For H - 7666 USD

For I - 2634 USD

For J - 10300 USD

For L - 1868 USD

I don't know how to calculate the Rental expense and Rou obligation at the end of the both years. (E, G, K, M)

Please help it's urgent :(

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