On June 30, 2019, the Patriotic Company purchased equipment from Jettison Corp. Patriotic agreed to pay Stone $15,000 on the purchase date and 5 payments of $12,000 on each June 30 thereafter.

Problem 2: On June 30, 2019, American Airlines leased a jumbo jet from Boeing Corporation. The terms of the lease require American to make 20 annual payments of $450,000 on each June 30 beginning on the first day of the lease.

Requirements:

Accounting standards require Beckman Company to record the equipment and American Airlines to record the jumbo jet as an asset and to record the present value of the lease payments as a liability. Assume that an interest rate of 4% properly reflects the time value of money in both situations.

For each problem:

1. present a calculation of the amount to record for the asset and the lease liability;

2. prepare a schedule for the lease like the one for BE 6-13 available on Sakai under Resources-->Chapter 6.