Company A started at the beginning of 2019.

They entered into a lease with Jan 1st as both inception and commenment date.

The Lease term is as below: -

5 yr non-cancellable -

5% interest rate

- equal payment of $22916.51 at the end of each year.

- $1,000 bargaining purchase option at the end of lease term.

Useful life of this asset is 6 years with 0 residual value.

Tax rate 25%, 30% and 35% each of the year

Earnings before interest, amortization and taxes is below.

2019: $123,456

2020: $234567

2021: $345678

Balance Sheet is below.

Year 2019:

Current Assets

Cash: ? Accounts Receivable: 120000 Prepaid Expenses: 8000 Future Tax Asset: ? Long-term Asset: ? Total Assets: ?

Current Liabilities

Accounts Payable: 100000 Unearned Revenue: 10000 Future Tax Liabilities: ? Long-term Liabilities: ? Total Liability: ?

Shareholders' Equity

Retained Earnings: ? Common Equity: 200000 Total Shareholders' Equity: ? Total Liability and Equity: ?

Year 2020:

Current Assets

Cash: ? Accounts Receivable: 100000 Prepaid Expenses: 5000 Future Tax Asset: ? Long-term Asset: ? Total Assets: ?

Current Liabilities

Accounts Payable: 80000 Unearned Revenue: 8000 Future Tax Liabilities: ? Long-term Liabilities: ? Total Liability: ?

Shareholders' Equity

Retained Earnings: ? Common Equity: 200000 Total Shareholders' Equity: ? Total Liability and Equity: ?

Year 2021:

Current Assets

Cash: ? Accounts Receivable: 150000 Prepaid Expenses: 2000 Future Tax Asset: ? Long-term Asset: ? Total Assets: ?

Current Liabilities

Accounts Payable: 90000 Unearned Revenue: 12000 Future Tax Liabilities: ? Long-term Liabilities: ? Total Liability: ?

Shareholders' Equity

Retained Earnings: ? Common Equity: 200000 Total Shareholders' Equity: ? Total Liability and Equity: ?

QUESTIONS:

a) Prepare amortization table for the lease

b) Record all related Journal Entries

c) Complete the balance sheet