8a)

Franklin, Inc. leased equipment from Juniper Co. on December 31, 2018. The lease meets the criteria of a finance lease under the new lease accounting standard. The lease requires annual payments of $150,000 due on December 31 of each year, beginning December 31, 2018 (at inception). The present value of the lease payments is $1,020,000, and the outstanding balance was $870,000 after the first payment on December 31, 2018. The interest rate implicit in the lease is 8%. How much interest expense will Franklin record for the year ended December 31, 2019? (Round to the nearest dollar.)

Choose the right answer below?

1. $69,600
2. $76,600
3. $81,600
4. $57,600

8b)

During 2019, Thomas Corporation repurchased some shares of its own common stock. What effect did this transaction have on 2019 stockholders' equity and earnings per share (EPS)?

Choose the right answer below?

1. Stockholders equity decreased and EPS increased.
2. Stockholders equity decreased and EPS decreased.
3. Stockholders equity increased and EPS decreased.
4. Stockholders equity decreased and there was no effect on EPS.