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Debra Leasing Company signs an agreement on January 1, 2025, to lease equipment to Marin Company. The following information relates to this agreement. 1
Debra Leasing Company signs an agreement on January 1, 2025, to lease equipment to Marin Company. The following information relates to this agreement. 1 2. 3. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years The fair value of the asset at January 1, 2025, is $94,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7,000, none of which is guaranteed. 4 The agreement requires equal annual rental payments of $30.41381 to the lessor beginning on January 1, 2025 5. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee Marin uses the straight-line depreciation method for all equipment. Click here to view factor tables (For calculation purposes, use 5 decimal places as displayed in the factor table provided) (a) Your Answer Correct Answer (Used) Your answer is correct. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Rounid answers to 2 decimal places, e 5,275.15 Annual Lease: Payment $ MARIN COMPANY (Lessee) Lease Amortization Schedule Interest on Liability 0 Reduction of Lease Liability 0 Lease Liability 06.96555 Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 2 decimal places, eg 5,275.15) Annual Lease Payment 0 30,413.81 30,413.81 MARIN COMPANY (Lessee) Lease Amortization Schedule Interest on Liability Reduction of Lease Liability 0 $ 0 2.827.59 Lease Liability 0 $ 86.965.55 30,413.81 56,55174 27,586.22 28,965.52 i 30,413.81 1.448.28 28.965.53 91,24143 $ 4,275.87 $ 86.965.56 Prepare all of the journal entries for the lessee for 2025 and 2026 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required. select "No Entry" for the account titles and enter O for the amounts. Round answers to 2 decimal places, eg. 5,275.15. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 1/1/25 Right-of-Use Asset 1/1/25 12/31/25 12/31/25 Lease Liability (To record the lease) Lease Liability Cash (To record lease payment) Interest Expense Interest Payable i (To record interest expense) Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset) 1/1/26 Lease Liability Cash (To record lease payment) 12/31/26 Interest Expense 12/31/26 V Interest Payable (To record interest expense) Amortication Expense Right of Une Asset (To record amortization of the right-of-use asset) Debit Credit 86.965.55 30.413.81 86.965,5 30.4138 282759 28275 17.39311 17.3931 56551.74 5655174 144828 17.393.11 1,448.2 17.393.11
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