On January 1, 2019, Scale Company signed a 6-year lease agreement for equipment. Annual payments are $31,700 at the end of each year. At the end of the lease, the equipment will revert to the lessor. The equipment has a useful life of 8 years and has $1800 residual value. At the time of the lease agreement, the equipment has a fair value of $150,000. An interest rate of 12% and double declining method of depreciation is used.

Fill in blanks: amortize the lease for 6 years. (Opening balance is your lease value: PV of all future payments)

Opening

Interest

Principal

Closing

Year

Balance

Expense

Payment

Payment

Balance

1

2

3

4

5

6

Journalize all the possible entries of year 1 & 2