Question
19.) User Company leased a Computer equipment from Owner Company on January 1 Yeaer 1. The computer equipment has an expected useful life of five
19.) User Company leased a Computer equipment from Owner Company on January 1 Yeaer 1. The computer equipment has an expected useful life of five years. The terms of the lease require annual payments of 5,000 for five years with the first payments being made on the lease signing date (January 1 Year1)-then four subsequent lease payments are made on January 1 of each subsequent year compounded annually. User Company is accounting for this lease as a capital lease. (round to the nearest dollar.) In the journal entry made in connection with this lease on December 31 there is a
A Debit to interest expense 2,585
B Debit to interest expense 2,500
C Credit to interest payable 2,085
D Debit to Interest Expense 2,000
E Debit to Interest Expense 1,895
F Credit to Interest payable 1,585
G Debit to Interest Payable 3,415
H Nothing-no journal entry is needed
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