Question
9:56 68 Laporte Engineering Company leased a machine on January 1, 2023, under a contract calling for four annual payments of $30,000 on December 31,
9:56
68
Laporte Engineering Company leased a machine on January 1, 2023, under a contract calling for four annual payments of $30,000 on December 31, 2023 through 2026. The machine becomes the property of the lessee after the fourth payment. The machine was predicted to have a service life of six years and no residual value, and the interest rate available to Laporte Engineering was 12% on the day the lease was signed. The machine was delivered on January 10, 2023, and was immediately placed in service.
Required:
1. Determine the initial net liability created by the lease and the cost of the leased asset. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)
Initial amount of the net liability
2. Prepare a table showing the calculation of the amount of interest expense allocated to each year the lease is in effect and the carrying amount of the liability at the end of each of those years. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Enter all the amounts as
positive values.
Payments
Beginning Net
Liability
Payment
Interest
Expense
Reduction in
Lease Liability
Lease Liability at End of Year
Year
2023
2024
2025
2026
Total expense
4. Prepare entries that would be made on December 31, 2024, to record the annual depreciation on a straight-line basis, and the recording of the lease payment. Also show how the machine and the lease liability should appear on the December 31, 2024, balance sheet. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Enter all amounts as positive values.
view transaction list
Journal entry worksheet
2
Record the depreciation on leased machinery.
Note: Enter debits before credits.
Date
Dec 31, 2024
General Journal
Debit
Credit
Record entry
Clear entry
View general journal
LAPORTE ENGINEERING COMPANY
Partial Balance Sheet
December 31, 2024
Property, plant and equipment
ent liabilities
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