Problem 14-11AC Capital lease accounting LO C3

Rogers Company signs a five-year capital lease with Packer Company for office equipment. The annual year-end lease payment is $22,000, and the interest rate is 6%. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)

1. Complete the below table to calculate the present value of Rogers's five-year lease payments. Lease Present value PV Factor Payment Amount of lease payments Journal entry worksheet 1 Record the capital lease of office equipment. Note: Enter debits before credits. Debit Transaction General Journal Credit 1 3. Complete a lease payment schedule for the five years of the lease with the following headings. Assume that the beginning balance of the lease liability is the present value of lease payments Beginning Balance of Lease Liability Lease Liability Lease Liability Cash Ending Balance of Period Ending Date Interest on Reduction of Lease Lease Liability ayment Year 1 Year 2 Year 3 Year 4 Year 5 Total 4. Use straight-line depreciation and prepare the journal entry to depreciate the leased asset at the end of year 1. Assume zero salvage value and a five-year life for the office equipment. View transaction list Journal entry worksheet 1 Record the annual depreciation expense on the office equipment at the end of year 1 Note: Enter debits before credits. Debit Transaction Credit General Journal 1