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Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,300 purchase option is
Refer to the following lease amortization schedule. The five payments are made annually starting with the beginning of the lease. A $2,300 purchase option is reasonably certain to be exercised at the end of the five-year lease. The asset has an expected economic life of eight years.
Lease Payment | Cash Payment | Effective Interest | Decrease in Balance | Outstanding Balance | ||||||
32,350 | ||||||||||
1 | 7,000 | ?? | ?? | 25,350 | ||||||
2 | 7,000 | 1,775 | 5,225 | 20,125 | ||||||
3 | 7,000 | 1,409 | 5,591 | 14,534 | ||||||
4 | 7,000 | 1,017 | 5,983 | 8,551 | ||||||
5 | 7,000 | ?? | ?? | ?? | ||||||
6 | 2,300 | 150 | 2,150 | 0 | ||||||
What would be the amount of interest expense recorded with payment 5? (Round your answer to the nearest whole dollar amount.)
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