Accounting for Leases On July 1, 2017, Shroff Company leased a warehouse building under a 15 year lease agreement The lease requires quarterly lease payments of $6,000 The first lease payment is due on September 30, 2017 The lease was reported as a capital lease using a 6 annual interest rate Required a Prepare the journal entry to record the initial signing of the lease on July 1, 2017 (Use a financial calculator or Excel to compute Round answer to the nearest whole number ) Date Description Debit Credit 07 01 2017 Answer Answer Answer Answer Answer Answer b Prepare the journal entries that would be necessary on September 30 and December 31, 2017 (Use rounded answer from above for subsequent calculations Round your answers to the nearest dollar ) Date Description Debit Credit 09 30 2017 Answer Answer Answer Answer Answer Answer To record depreciation expense 09 30 2017 Answer Answer Answer Interest expense Answer Answer Answer Answer Answer To record lease payment 12 31 2017 Answer Answer Answer Answer Answer Answer To record depreciation expense 12 31 2017 Answer Answer Answer Interest expense Answer Answer Answer Answer Answer To record lease payment c Post the entries from parts a and b in their appropriate T accounts Cash (A) 07 01 17 Answer Answer 09 30 17 Answer Answer 12 31 17 Answer Answer Leased Asset (A) 07 01 17 Answer Answer 09 30 17 Answer Answer 12 31 17 Answer Answer Accumulated Depreciation (XA) 07 01 17 Answer Answer 09 30 17 Answer Answer 12 31 17 Answer Answer Lease Liability (L) 07 01 17 Answer Answer 09 30 17 Answer Answer 12 31 17 Answer Answer Interest Expense (E) 07 01 17 Answer Answer 09 30 17 Answer Answer 12 31 17 Answer Answer Depreciation Expense (E) 07 01 17 Answer Answer 09 30 17 Answer Answer 12 31 17 Answer Answer d Prepare a financial statement effects template to show the effects of the entries from parts a and b on the balance sheet and income statement Balance Sheet Transaction Cash Asset Noncash Assets Contra Assets Liabilities Contrib Capital Earned Capital 7 1 17 Signed a capital lease $Answer $Answer $Answer $Answer $Answer $Answer 9 30 17 Depreciation on leased asset Answer Answer Answer Answer Answer Answer 9 30 17 Made quarterly lease payment Answer Answer Answer Answer Answer Answer 12 31 17 Depreciation on leased asset Answer Answer Answer Answer Answer Answer 12 31 17 Made quarterly lease payment Answer Answer Answer Answer Answer Answer Income Statement Revenue Expenses Net Income $Answer $Answer $Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer e Redo parts a and b assuming that the lease is reported as an operating lease (If no entry is required, enter No entry for the debit and credit account name ) Date Description Debit Credit 7 1 2017 Answer Answer Answer Answer Answer Answer 9 30 2017 Answer Answer Answer Answer Answer Answer 12 31 2017 Answer Answer Answer Answer Answer Answer

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Accounting for Leases On July 1, 2017, Shroff Company leased a warehouse building under a 15-year lease agreement. The lease requires quarterly lease payments of

Accounting for Leases

On July 1, 2017, Shroff Company leased a warehouse building under a 15-year lease agreement. The lease requires quarterly lease payments of $6,000. The first lease payment is due on September 30, 2017. The lease was reported as a capital lease using a 6% annual interest rate.

Required a. Prepare the journal entry to record the initial signing of the lease on July 1, 2017. (Use a financial calculator or Excel to compute. Round answer to the nearest whole number.)

Date	Description	Debit	Credit
07/01/2017	Answer

Answer	Answer
	Answer

Answer

b. Prepare the journal entries that would be necessary on September 30 and December 31, 2017. (Use rounded answer from above for subsequent calculations. Round your answers to the nearest dollar.)

Date	Description	Debit	Credit
09/30/2017	Answer

Answer	Answer
	Answer

Answer	Answer
	To record depreciation expense.
09/30/2017	Answer

Answer	Answer
	Interest expense	Answer	Answer
	Answer

Answer	Answer
	To record lease payment.
12/31/2017	Answer

Answer	Answer
	Answer

Answer	Answer
	To record depreciation expense.
12/31/2017	Answer

Answer	Answer
	Interest expense	Answer	Answer
	Answer

Answer	Answer
	To record lease payment.

c. Post the entries from parts a and b in their appropriate T-accounts.

Cash (A)
07/01/17	Answer	Answer
09/30/17	Answer	Answer
12/31/17	Answer	Answer

Leased Asset (A)
07/01/17	Answer	Answer
09/30/17	Answer	Answer
12/31/17	Answer	Answer

Accumulated Depreciation (XA)
07/01/17	Answer	Answer
09/30/17	Answer	Answer
12/31/17	Answer	Answer

Lease Liability (L)
07/01/17	Answer	Answer
09/30/17	Answer	Answer
12/31/17	Answer	Answer

Interest Expense (E)
07/01/17	Answer	Answer
09/30/17	Answer	Answer
12/31/17	Answer	Answer

Depreciation Expense (E)
07/01/17	Answer	Answer
09/30/17	Answer	Answer
12/31/17	Answer	Answer

d. Prepare a financial statement effects template to show the effects of the entries from parts a and b on the balance sheet and income statement.

Balance Sheet
Transaction	Cash Asset	+	Noncash Assets	-	Contra-Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital
7/1/17 Signed a capital lease	$Answer	+	$Answer	-	$Answer	=	$Answer	+	$Answer	+	$Answer
9/30/17 Depreciation on leased asset	Answer	+	Answer	-	Answer	=	Answer	+	Answer	+	Answer
9/30/17 Made quarterly lease payment	Answer	+	Answer	-	Answer	=	Answer	+	Answer	+	Answer
12/31/17 Depreciation on leased asset	Answer	+	Answer	-	Answer	=	Answer	+	Answer	+	Answer
12/31/17 Made quarterly lease payment	Answer	+	Answer	-	Answer	=	Answer	+	Answer	+	Answer


Revenue	-	Expenses	=	Net Income
$Answer	-	$Answer	=	$Answer
Answer	-	Answer	=	Answer
Answer	-	Answer	=	Answer
Answer	-	Answer	=	Answer
Answer	-	Answer	=	Answer

e. Redo parts a and b assuming that the lease is reported as an operating lease. (If no entry is required, enter "No entry" for the debit and credit account name.)