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American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2018.
American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2018. The lease agreement for the $5.2 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 six years with no residual value. Barton and Barton's implicit interest rate was 12%. (FV of $1, PV of $1, FVA 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 beginning of the lease on January 1, 2018. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2018 and 2020. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 and 4 Prepare an amortization schedule for the four-year term of the lease. (Enter your answers in whole dollars and not in millions. Round your answers to nearest whole dollar. Enter all amounts as positive values.) Lease Amortization Schedule Effective Decrease in Interest Balance Year Lease Payments Outstanding Balance 2018 2019 2020 2021 Total 0 Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2018. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2018 and 2020. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 and 4 Prepare the appropriate entries related to the lease on December 31, 2018 and 2020. (Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No General Journal Debit Credit Date December 31, 1 2018 Interest expense Lease payable Cash 2 December 31, 2018 Amortization expense Right-of-use asset December 31 3 Interest expense 2020 Lease payable Cash 4 December 31, 2020 Amortization expense Right-of-use asset American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2018. The lease agreement for the $5.2 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 six years with no residual value. Barton and Barton's implicit interest rate was 12%. (FV of $1, PV of $1, FVA 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 beginning of the lease on January 1, 2018. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2018 and 2020. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 and 4 Prepare an amortization schedule for the four-year term of the lease. (Enter your answers in whole dollars and not in millions. Round your answers to nearest whole dollar. Enter all amounts as positive values.) Lease Amortization Schedule Effective Decrease in Interest Balance Year Lease Payments Outstanding Balance 2018 2019 2020 2021 Total 0 Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2018. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2018 and 2020. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 and 4 Prepare the appropriate entries related to the lease on December 31, 2018 and 2020. (Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No General Journal Debit Credit Date December 31, 1 2018 Interest expense Lease payable Cash 2 December 31, 2018 Amortization expense Right-of-use asset December 31 3 Interest expense 2020 Lease payable Cash 4 December 31, 2020 Amortization expense Right-of-use asset
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