accounting

American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2016. The lease agreement for the $4.5 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value. Barton and Barton's implicit interest rate was 8% (also American Food Services' incremental borrowing rate). (FV of $1, PV of $1, EVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for American Food Services at the inception of the lease on January 1, 2016. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) Answer is complete and correct. No Date General Journal Debit Credit 1 January (Leased assets 4,50 Lease payable 4,50 2. Prepare an amortization schedule for the four-year term of the lease. X Answer is complete but not entirely Lease Amortization Schedule Decrease Year Lease Effective in Outstandi Payments Interest Balance Balance 4,500,( 2016 1,358,65 X 360,00 998,65 X 3,501, 2017 1,358,65 X 280, 10 1,078,54 X 2,422, 2018 1,358,656 193,82 X 1,154,83 X 1,267,! 3. Prepare the journal entry for the first lease payment on December 31, 2016. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) X Answer is complete but not entirely correct. No Date General Journal Debit Credit 1 Decemberterest expense 360,VO Lease payable 998,VE Cash 1,35 X4. Prepare the journal entry for the third lease payment on December 31, 2018. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) X Answer is not complete. No Date General Journal Debit Credit 1 Decembernterest expense Lease payable Cash