Problem 21A-3 a-d Swifty Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2017. Annual rental payments of $54,000 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 6%; Swifty's incremental borrowing rate is 8%. Swifty is unaware of the rate being used by the lessor. At the end of the lease, Swifty 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. Swifty uses the straight-line method of depreciation on similar owned equipment. Click here to view factor tables Your answer is partially correct. Try again. Prepare the journal entries, that Swifty 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 0 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 Account Titles and Explanation Credit December 31, 2017Lease 232855 Lease Liability 232855 (To record leased asset and related liability.) Lease Liability 54000 Cash 54000 (To record the first rental payment.) SHOW LIST OF ACCOUNTS Your answer is partially correct. Try again. Prepare the journal entries, that Swifty 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 O for the amounts.) Date December 31, 2018 Depreciation Expense Debit Account Titles and Explanation Credit 33265 Accumulated Depreciation-Capital Leases 33265 (To record amortization.) Interest Expense Lease Liability Cash 54000 (To record annual payment on lease liability.) SHOW LIST OF ACCOUNTS Your answer is partially correct. Try again. Prepare the journal entries, that Swifty 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.) Account Titles and Explanation Debit Date December 31, 2019 Depreciation Expense 33265 33265 Accumulated Depreciation-Capital Leases (To record annual amortization on leased assets.) Interest Expense Lease Liability Cash 54000 (To record annual payment on lease liability.) SHOW LIST OF ACCOUNTS What amounts would appear on Swifty's December 31, 2019, balance sheet relative to the lease arrangement? (Round answers to 0 decimal places, e.g 58,971.) SWIFTY STEEL COMPANY Balance Sheet December 31, 2019 Assets Property, Plant and Equipment Leased Equipment Liabilities Current Liabilities Lease Liability Long-term Liabilities Lease Liability Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS
