Problem 21A-3 a-d Shamrock Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2017. Annual rental payments of $56,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 696; Shamrock's incremental borrowing rate is 8%. Shamrock is unaware of the rate being used by the lessor. At the end of the lease, Shamrock has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value Shamrock uses the straight-line method of depreciation on similar owned equipment iew factor tables er Your answer is partially correct. Try again. Prepare the journal entries, that Shamrock should record on December 31, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places, e.g. 58,971.) Debit Date Account Titles and Explanation Credit December 31, 2017 Right-of-Use Asset 241480 241480 Lease Liability To record leased asset and related liability.) Lease Liability 56000 56000 Cash To record the first rental payment.) Your answer is partially correct. Try again. Prepare the journal entries, that Shamrock should record on December 31, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date December 31, 2018 Amortization Expense Account Titles and Explanation Debit Credit 34497 Right-of-Use Asset (To record amortization.) Interest Expense 34497 14838 Lease Liability 41162 Cash 56000 (To record annual payment on lease liability.) SHOW LIST OF ACCOUNTS Your answer is partially correct. Try again. repare the journal entries, that Shamrock should record on December 31, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to o decimal places e.g. 58,971.) Date Account Titles and Explanation Debit Credit December 31, 2019 Amortization Expense 34497 Right-of-Use Asset 34497 (To record annual amortization on leased assets.) Interest Expense 11545 44455 Lease Liability Cash 56000 (To record annual payment on lease liability.) What amounts would appear on Shamrock's December 31, 2019, balance sheet relative to the lease arrangement? (Roun 58,971.) SHAMROCK STEEL COMPANY Balance Sheet December 31, 2019 Assets Property, Plant and Equipment 172486 Accumulated Depreciation-Leased Equipment Liabilities Current Liabilities 51852 Lease Liability Long-term Liabilities 48011 Lease Liability Click if you would like to Show Work for this question: Open Show Work
