On January 1, 2018, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 13% rate of return for providing long-term financing. The lease agreement specified: points eBook a. Ten annual payments of $68,000 beginning January 1, 2018, the beginning of the lease and each December 31 thereafter through 2026. b. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $380,163. 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 $6,000 per year are specified, beginning January 1, 2018. 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: Print References (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 Payments Outstanding Balance Effective Interest (138 Outstanding balance) 1/1/2018 12/31/2018 12/31/2019 62,000 62,000 62,000 0.13 (318,163) = 41,361 0.13 (297,524) - 38,678 62,000 20,639 23,322 380,163 318, 163 297,524 274,202 Required: 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2018 and December 31, 2018 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2018 and December 31, 2018. Complete this question by entering your answers in the tabs below. 16 12/31/2019 62,000 0.13 (297,524) - 38,678 23,322 274,202 Required: 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2018 and December 31, 2018. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2018 and December 31, 2018. Complete this question by entering your answers in the tabs below. eBook Required 1 Required 2 Print Prepare the appropriate entries for the lessee related to the lease on January 1, 2018 and December 31, 2018. (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.) References View transaction list Journal entry worksheet 2 3 4 Record lease by lessee. Note: Enter debits before credits. General Journal Debit Credit Date January 01, 2018 Required: 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2018 and December 31, 2018. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2018 and December 31, 2018. 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, 2018 and December 31, 2018. (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 Journal entry worksheet
