prepare journal entries for Adden for the year 2019

prepare journal entries for Adden for the year 2020

Adden Company signs a lease agreement dated January 1, 2019, that provides for it to lease non-specialized heavy equipment from Scott Rental Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of $20,000 to be paid in advance at the beginning of each year. 2. The cost, and also fair value, of the heavy equipment to Scott at the inception of the lease is $68,036.62. The equipment has an estimated life of 4 years and has a zero estimated residual value at the end of this time. 3. Adden agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. Scotts interest rate implicit in the lease is 12%. Adden is aware of this rate, which is equal to its borrowing rate. 6. Adden uses the straight-line method to record depreciation on similar equipment. 7. Exocutory costs paid at the end of the year by Adden are: Required: 1. Next Level Determine what type of lease this is for Adden. 2. Prepare a table summarizing the lease payments and interest expense for Adden. 3. Prepare journal entries for Adden for the years 2019 and 2020. General Joumal Shaded cells have feedback. How does groding work? CHART OF ACCOUNTS Adden Company General Ledger ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Acoounts Receivabie 141 Inventory EXPENSES 152. Prepaid insurance 500 Cost of Goods Sold 181 Equipment 511 insurance Expense 189 Accumulated Depreciation 512 Ubilites Expense 190 Right-of-Use Asset 513 Lease Expense 515 Amortization Expense LIABILITIES 516 Property Tax Expense 211 Accounts Payable 521 Salaries Expense Chart of Accounts 152 Prepaid Insurance 500 Cost of Goods Sold 181 Equipment 511 Insurance Expense 189 Accumulated Depreciation 512 Utilities Expense 190 Right-of-Use Asset 513 Lease Expense 515 Amortization Expense LIABILITIES 516 Property Tax Expense 211 Accounts Payable 521 Salaries Expense 231 Salaries Payable 532 Bad Debt Expense 253 Lease Liability 540 Interest Expense 261 Income Taxes Payable 541 Depreciation Expense 559 Miscekaneous Expenses EQUITY 910 Income Tax Expense 311 Common Stock 331 Retained Eamings