Problem 14-11AC Accounting for finance lease LO C3 [The following information applies to the questions displayed below.) On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $26.728 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $76,300, using a 5.180% interest rate. The lease payment schedule follows. Payments Date Jan. 1, Year 1 Dec. 31, Year 1 Dec. 31, Year 2 + (A) Beginning Balance of Lease Liability $ 76,300 49,572 25,412 (B) Debit Interest on Lease Liability 6.003% X (A) $ 2,568 1,316 $ 3,884 Debit Lease Liability (D) - (8) $ 26,728 24,160 25,412 $76,300 (E) Ending Balance of Lease Liability (A) - (c) $49,572 25,412 (D) Credit Cash Lease Payment $ 26,728 26,728 26,728 $80, 184 Problem 14-11AC Part 1 1. Prepare the January 1journal entry at the start of the lease to record any asset or liability [The following information applies to the questions displayed below.) On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $26.728 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $76,300, using a 5.180% interest rate. The lease payment schedule follows. Payments Date Jan. 1, Year 1 Dec. 31, Year 1 Dec. 31, Year 2 (A) Beginning Balance of Lease Liability $76,300 49,572 25,412 (8) Debit Interest on Lease Liability 6.003% X (A) $ @ 2,568 1,316 $ 3,884 (0) Debit Lease Liability (D) - (B) $ 26,728 24,160 25,412 $ 76,300 (D) Credit Cash Lease Payment $ 26,728 26,728 26,728 $80,184 (E) Ending Balance of Lease Liability (A) - (0) $49,572 25,412 Problem 14.11AC Part 2 2. Prepare the January 1 journal entry to record the first $26.728 cash lease payment. [The following information applies to the questions displayed below.] On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $26.728 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $76,300, using a 5.180% interest rate. The lease payment schedule follows Payments (B) Debit Date (A) Beginning Balance of Lease Liability $ 76,300 49,572 25,412 Jan. 1, Year 1 Dec. 31, Year 1 Dec. 31, Year 2 Interest on Lease Liability 6.003% X (A) $ 2,568 (C) Debit Lease Liability (D) - (B) $ 26,728 24,160 25,412 $76,300 (E) Ending Balance of Lease Liability (A) - (C) $49,572 25,412 (D) Credit Cash Lease Payment $ 26,728 26,728 26,726 $80, 184 1,316 $ 3,884 Problem 14.11AC Part 3 3. Prepare the December 31 journal entry to record straight-line amortization with zero salvage value at the end of (a) Year 1. (b) Year 2. and (C) Year 3. Problem 14.11AC Accounting for finance lease LO C3 [The following information applies to the questions displayed below] On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $26,728 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $76,300, using a 5.180% interest rate. The lease payment schedule follows. Payments (E) Beginning Balance of Lease Liability $76,300 49,572 25,412 Date Jan. 1, Year 1 Dec. 31, Year 1 Dec. 31, Year 2 (B) Debit Interest on Lease Liability 6.003% X (A) $ 2,568 1,316 $ 3,884 (C) Debit Lease Liability (D) (8) $ 26,728 24,160 25,412 $ 76,300 (D) Credit Cash Lease Payment $ 26,728 26,728 26,728 5 80,184 Ending Balance of Lease Liability (A) - (C) $49,572 25,412 Problem 14.11AC Part 4 4. Prepare the December 31 journal entry to record the $26.728 cash lease payment at the end of (a) Year 1 and (b) Year 2