Exercise 21-8 (Part Level Submission)

The following facts pertain to a noncancelable lease agreement between Wildhorse Leasing Company and Sheffield Company, a lessee.

Inception date:		May 1, 2017
Annual lease payment due at the beginning of
each year, beginning with May 1, 2017		$22,157.08
Bargain-purchase option price at end of lease term		$4,200
Lease term		5	years
Economic life of leased equipment		10	years
Lessors cost		$68,000
Fair value of asset at May 1, 2017		$95,000
Lessors implicit rate		10	%
Lessees incremental borrowing rate		10	%

The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs.

Prepare a lease amortization schedule for Sheffield Company for the 5-year lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25125 and Round answers to 2 decimal places, e.g. 15.25.)

Date

Annual Lease Payment Plus BPO 5/1/17 5/1/17 5/1/18 5/1/19 5/1/20 5/1/21 4/30/22

Interest on Liability

Reduction of Lease Liability

Lease Liability