Required information Problem 14-12AB (Algo) 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 $21,205 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 $60,500, using a 5.240% interest rate. The lease payment schedule follows. (A) Beginning (B) Debit Balance of Interest on Lease Lease Liability Liability 6.003% X (A) $ 60,500 $ 39,295 2,059 20,149 1,056 $ 3,115 Date January 1, Year 1 December 31, Year 1 December 31, Year 2 (C) Debit Lease Liability (D) - (B) $ 21, 205 19,146 20,149 $ 60,500 (E) Ending Balance of Lease Liability (A) - (C) $ 39,295 20,149 (D) Credit Cash Lease Payment $ 21,205 21, 205 21, 205 $ 63,615 Problem 14-12AB (Algo) Part 2 2. Prepare the January 1journal entry to record the first $21,205 cash lease payment. No Credit Answer is complete but not entirely correct. Date General Journal Debit Year 1 January 01 Right-of-Use Asset 21,205 Lease liability 1 21,205 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. View transaction list Journal entry worksheet Record amortization of right-of use asset at December 31 of the first year. Note: Enter debits before credits. Date General Journal Debit Credit Year 1 December 31 Record entry Clear entry View general journal Problem 14-12AB (Algo) 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. View transaction list Journal entry worksheet Record amortization of right-of use asset at December 31 of the second year. Note: Enter debits before credits. General Journal Debit Credit Date Year 2 December 31 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 > Record amortization of right-of use asset at December 31 of the third year. Note: Enter debits before credits. General Journal Debit Credit Date Year 3 December 31 Record entry Clear entry View general journal 4. Prepare the December 31 journal entry to record the $21,205 cash lease payment at the end of (a) Year 1 and (b) Year 2. View transaction list Journal entry worksheet 1 N 2 > Record lease payment on December 31 of the first year. Note: Enter debits before credits. General Journal Debit Credit Date Year 1 December 31 Record entry Clear entry View general journal 4. Prepare the December 31 journal entry to record the $21,205 cash lease payment at the end of (a) Year 1 and (b) Year 2. View transaction list Journal entry worksheet Record lease payment on December 31 of the second year. Note: Enter debits before credits. General Journal Debit Credit Date Year 2 December 31 Record entry Clear entry View general journal 4. Prepare the December 31 journal entry to record the $21,205 cash lease payment at the end of (a) Year 1 and (b) Year 2. View transaction list Journal entry worksheet Record lease payment on December 31 of the second year. Note: Enter debits before credits. General Journal Debit Credit Date Year 2 December 31 Record entry Clear entry View general journal Journal entry worksheet Record the journal entry for any asset or liability at the start of the lease. Note: Enter debits before credits. General Journal Debit Credit Date Year 1 January 01 Record entry Clear entry View general journal Required 1 Required 2 Required 3 Required 4 Prepare the January 1 journal entry to record the first $17,400 cash lease payment. View transaction list Journal entry worksheet Record the first lease payment on January 1. Note: Enter debits before credits. General Journal Debit Credit Date Year 1 January 01 Record entry Clear entry View general journal