Accounting for Leases

On July 1, 2020, Shroff Company leased a warehouse building under a 10-year lease agreement. The lease requires quarterly lease payments of $6,500. The first lease payment is due on September 30, 2020. The lease was reported as a finance lease using an 8% annual interest rate.

a. Prepare the journal entry to record the commencement of the lease on July 1, 2020. b. Prepare the journal entries that would be necessary on September 30 and December 31, 2020. c. Prepare a financial statement effects template to show the effects template to show the effects of the entries from parts a and b on the balance sheet and income statement.

Note: Round answers to the nearest dollar. Use rounded answers for subsequent computations.

Date Description Debit Credit 7/1/20 0 0 0 0 9/30/20 0 0 0 0 9/30/20 Interest expense 0 0 0 0 0 0 12/31/20 0 0 0 0 12/31/20 Interest expense 0 0 0 0 0 0 Please ans Accumulated amortization - finance lease Amortization expense - finance lease Cash Finance lease liability Interest expense Operating lease expense Operating lease liability Right-of-use asset - operating lease Right-of-use lease asset - finance lease