Question
Metlock Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 5 years and requires equal rental payments of $33,021
Metlock Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 5 years and requires equal rental payments of $33,021 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $140,000, an estimated useful life of 5 years, and no estimated residual value. The appropriate interest rate is 9%. Click here to view factor tables. Prepare Metlocks 2019 and 2020 journal entries, assuming Metlock depreciates similar equipment it owns on a straight-line basis. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.)
Date | Account Titles and Explanation | Debit | Credit | |
---|---|---|---|---|
12/31/1912/31/20 | enter an account title To record lease liability on December 31 2019 | enter a debit amount | enter a credit amount | |
enter an account title To record lease liability on December 31 2019 | enter a debit amount | enter a credit amount | ||
(To record lease liability) | ||||
12/31/1912/31/20 | enter an account title To record lease payment on December 31 2016 | enter a debit amount | enter a credit amount | |
enter an account title To record lease payment on December 31 2016 | enter a debit amount | enter a credit amount | ||
(To record lease payment) | ||||
| enter an account title To record interest expense on December 31 2020 | enter a debit amount | enter a credit amount | |
enter an account title To record interest expense on December 31 2020 | enter a debit amount | enter a credit amount | ||
enter an account title To record interest expense on December 31 2020 | enter a debit amount | enter a credit amount | ||
(To record interest expense) | ||||
12/31/1912/31/20 | enter an account title To record amortization of the right-of-use asset on December 31 2020 | enter a debit amount | enter a credit amount | |
enter an account title To record amortization of the right-of-use asset on December 31 2020 | enter a debit amount | enter a credit amount | ||
(To record amortization of the right-of-use asset) |
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