2c. On the assumption that La Jolla Company adjust and close books each December 31, prepare journal entries relating to the lease for the company through December 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straight-line method.

Prepare journal entries for La Jolla Company, Lessee, for 2019.

Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease for 5 years. The equipment has a 5-year life, cost Diego $25,000, and will have no residual value when the lease term ends. The fair value of the equipment is $30,000. La Jolla agrees to pay all executory cost (\$500 per year) throughout the lease period directly to a third party. On January 1,2019 , the equipment is delivered. Dlego expects a 14% return on its net investment. The five equal annual rents are payable in advance starting January 1,2019. Required: 1. Assuming this is a seles-type loase for the Diego and a finance lease for the La Jolla, propare a table summarizing the lease and interest payments suitable for use by either party 2. Next Level On the assumption that both companies adjust and close books each December 31, prepare joumal entries relating to the lease for both companies through December 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straight-line method. CHART OF ACCOUNTS La Jolla Company General Ledger ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts Receivable 433 Interest Income 141 Inventory 152 Prepaid Insurance EXPENSES 180 Equipment 500 Cost of Goods Sold 189 Accumulated Depreciation 511 Insurance Expense 190 Right-of-Use Asset 512 Utilities Expense 514 Executory Costs Chart of Accounts - Lessee 152 Prepaid Insurance EXYENSES 180 Equipment 500 Cost of Goods Sold 189 Accumulated Depreciation 511 Insurance Expense 190 Right-of-Use Asset 512 Utilities Expense 514 Executory Costs LIABILITIES 515 Amortization Expense 211 Accounts Payable 521 Salaries Expense 231 Salaries Payable 532 Bad Debt Expense 250 Unearned Interest 540 Interest Expense 253 Lease Liability 541 Depreciation Expense 261 Income Taxes Payable 559 Miscellaneous Expenses 910 Income Tax Expense EQUITY 311 Common Stock 331 Retained Earnings Prepare journal entries for La Jolla Company, Lessee, for 2020. Question not attempted. Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease for 5 years. The equipment has a 5-year life, cost Diego $25,000, and will have no residual value when the lease term ends. The fair value of the equipment is $30,000. La Jolla agrees to pay all executory cost (\$500 per year) throughout the lease period directly to a third party. On January 1,2019 , the equipment is delivered. Dlego expects a 14% return on its net investment. The five equal annual rents are payable in advance starting January 1,2019. Required: 1. Assuming this is a seles-type loase for the Diego and a finance lease for the La Jolla, propare a table summarizing the lease and interest payments suitable for use by either party 2. Next Level On the assumption that both companies adjust and close books each December 31, prepare joumal entries relating to the lease for both companies through December 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straight-line method. CHART OF ACCOUNTS La Jolla Company General Ledger ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts Receivable 433 Interest Income 141 Inventory 152 Prepaid Insurance EXPENSES 180 Equipment 500 Cost of Goods Sold 189 Accumulated Depreciation 511 Insurance Expense 190 Right-of-Use Asset 512 Utilities Expense 514 Executory Costs Chart of Accounts - Lessee 152 Prepaid Insurance EXYENSES 180 Equipment 500 Cost of Goods Sold 189 Accumulated Depreciation 511 Insurance Expense 190 Right-of-Use Asset 512 Utilities Expense 514 Executory Costs LIABILITIES 515 Amortization Expense 211 Accounts Payable 521 Salaries Expense 231 Salaries Payable 532 Bad Debt Expense 250 Unearned Interest 540 Interest Expense 253 Lease Liability 541 Depreciation Expense 261 Income Taxes Payable 559 Miscellaneous Expenses 910 Income Tax Expense EQUITY 311 Common Stock 331 Retained Earnings Prepare journal entries for La Jolla Company, Lessee, for 2020. Question not attempted