On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $423,414 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2024, to be $60,000. Negotiations led to Maywood guaranteeing a $85,000 residual value.

Equal payments under the lease are $120,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. (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.) Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1, 2021 and December 31, 2021, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar.)

Check my work 1 On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $423,414 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2024, to be $60,000. Negotiations led to Maywood guaranteeing a $85,000 residual value. 3 points Equal payments under the lease are $120,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. (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.) eBook Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1, 2021 and December 31, 2021, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar.) Print References View transaction list View journal entry worksheet No Date General Journal Debit Credit 1 January 01, 2021 Right-of-use asset Lease payable 2 December 31, 2021 Amortization expense Right-of-use asset 3 December 31, 2021 Interest expense Lease payable Cash