Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Accounting for Leases On January 3, 2017, Hanna Corporation signed a lease on a machine for its manufacturing operation. The lease requires Hanna to make
Accounting for Leases On January 3, 2017, Hanna Corporation signed a lease on a machine for its manufacturing operation. The lease requires Hanna to make six annual lease payments of $12,000 with the first payment due December 31, 2017. Hanna could have financed the machine by borrowing the purchase price at an interest rate of 7%. a. Prepare the journal entries that Hanna Corporation would make on January 3 and December 31, 2017, to record this lease assuming its i. an operating lease and ii. a capital lease. Round answers to the nearest whole number. If no entry is required, select "No entry" from the drop-down answer options for the debit and credit entries. ii. the lease is reported as a capital lease General Journal Date Description Debit Credit Jan. 3 Lease liability Lease liability To record inception of lease Dec. 3Depreciation expense> Accumulated depreciation To record depreciation expense. Dec. 31 Lease liability Interest expense Cash To record payment on lease
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started