On December 31, 2019, Teal Mountain Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Teal Mountain to
On December 31, 2019, Teal Mountain Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Teal Mountain to make annual payments of $8,634 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $4,900 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Teal Mountain uses the straight-line method of depreciation for all of its plant assets. Teal Mountains incremental borrowing rate is 12%, and the lessors implicit rate is unknown.
Prepare all necessary journal entries for Teal Mountain for this lease through December 31, 2020. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.)
Date | Account Titles and Explanation | Debit | Credit | |
---|---|---|---|---|
choose a transaction date 12/31/1912/31/20 | enter an account title to record the lease | enter a debit amount | enter a credit amount | |
enter an account title to record the lease | enter a debit amount | enter a credit amount | ||
(To record the lease) | ||||
choose a transaction date 12/31/1912/31/20 | enter an account title to record first lease payment | enter a debit amount | enter a credit amount | |
enter an account title to record first lease payment | enter a debit amount | enter a credit amount | ||
(To record first lease payment) | ||||
choose a transaction date 12/31/1912/31/20 | enter an account title to record amortization of the right-of-use asset | enter a debit amount | enter a credit amount | |
enter an account title to record amortization of the right-of-use asset | enter a debit amount | enter a credit amount | ||
(To record amortization of the right-of-use asset) | ||||
| enter an account title to record interest expense | enter a debit amount | enter a credit amount | |
enter an account title to record interest expense | enter a debit amount | enter a credit amount | ||
enter an account title to record interest expense | enter a debit amount | enter a credit amount | ||
(To record interest expense) |
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