Question
Grouper Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Monty Airlines for a period of 10
Grouper Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to Monty Airlines for a period of 10 years. The normal selling price of the equipment is $255,322, and its unguaranteed residual value at the end of the lease term is estimated to be $20,600. Monty will pay annual payments of $36,600 at the beginning of each year. Grouper incurred costs of $179,000 in manufacturing the equipment and $3,800 in sales commissions in closing the lease. Grouper has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 10%. Monty Airlines has an incremental borrowing rate of 10%.
Prepare a 10-year lease amortization schedule. (Round answers to 0 decimal places e.g. 58,970.)
MONTY AIRLINES (Lessee) Lease Amortization Schedule (Annuity-due basis and URV) | ||||||||
Beginning of Year | Annual Lease Payment | Interest on Lease Liability | Reduction of Lease Liability | Lease Liability | ||||
Initial PV | $ | $ | $ | $ | ||||
1 | ||||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
7 | ||||||||
8 | ||||||||
9 | ||||||||
10 | ||||||||
$ | $ | $ |
Prepare all of the lessees journal entries for the first year. Assume straight-line depreciation. (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 0 for the amounts. Round answers to 0 decimal places e.g. 58,970.)
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