Exercise 15-33 (Algo) Nonlease payments; lessor and lessee (LO15-2, 15-7) On January 1, 2021, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 12% rate of return for providing long-term financing. The lease agreement specified the following: a. Ten annual payments of $74,000 beginning January 1, 2021, the beginning of the lease and each December 31 thereafter through 2029 b. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $411,336. c. The lease qualifies as a finance lease/sales-type lease. d. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $9,000 per year are specified, beginning January 1, 2021. NRC was to pay this cost as incurred, but lease payments reflect this expenditure. e. A partial amortization schedule, appropriate for both the lessee and lessor, follows: (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.) Decrease in Balance Outstanding Balance Payments Effective Interest (12% x Outstanding balance) 1/1/2021 12/31/2021 12/31/2022 65,000 65,000 65,000 0.12 (346,336) = 41,560 0.12 (322,896 ) = 38,748 65,000 23,440 26,252 411,336 346, 336 322,896 296,644 Required: 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2021 and December 31, 2021. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2021 and December 31, 2021. Required: 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2021 and December 31, 2021. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2021 and December 31, 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate entries for the lessee related to the lease on January 1, 2021 and December 31, 2021. (Round your intermediate and final answers to the nearest whole dollar amount. 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 Date General Journal Debit Credit 1 January 01, 2021 Right-of-use asset Lease payable 2 January 01, 2021 Lease payable Prepaid maintenance expense Cash 4 December 31, 2021 Amortization expense Required: 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2021 and December 31, 2021. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2021 and December 31, 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate entries for the lessor related to the lease on January 1, 2021 and December 31, 2021. (Round your intermediate and final answers to the nearest whole dollar amount. 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 1 Date January 01, 2021 Lease receivable Equipment 2 January 01, 2021 Cash Maintenance fee payable Lease receivable 3 December 31, Cash 2021 Interest revenue Lease receivable
