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On January 1, 2020, Swifty Construction Company contracts to lease equipment for 4 years, agreeing to make a payment of $97,468 at the beginning of

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On January 1, 2020, Swifty Construction Company contracts to lease equipment for 4 years, agreeing to make a payment of $97,468 at the beginning of each year, starting January 1, 2020. The leased equipment is to be capitalized at $358,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Swifty's incremental borrowing rate is 6%, and the implicit rate in the lease is 6%, which is known by Swifty, Title to the equipment transfers to Swifty at the end of the lease. The asset has an estimated useful life of 4 years and no residual value, Click here to view factor tables. (b) Your answer is correct Prepare the journal entries that Swifty should record on January 1, 2020. (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 for the amounts. Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answers to decimal places, eg. 5,275.) Account Titles and Explanation Debit Credit Date January 1 2020 Right-of-Use Asset 358000 Lease Liability 358000 (To record the lease) Les Liability 97460 Prepare the journal entries to record amortization of the leased asset and interest expense for the year 2020. (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 for the amounts. Round answers to decimal places, eg. 5,275.) Debit Credit 143200 Date Account Titles and Explanation December Amortization Expense 31.2020 Right-of-Use Asset (To record amortization of the leased asset.) December Interest Expense 31,2020 143200 15632 TE Lease Liability 15632

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