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 $5,000. 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 a financial statement effects template to show the effects of recording the initial signing of the lase on July 1, 2017 and the necessary entries on September 30 and December 31, 2017.

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