Question
Rode Company leases space from United Corporation. When Rode entered into a financing lease with United, it prepared the following amortization table. The interest rate
Rode Company leases space from United Corporation. When Rode entered into a financing lease with United, it prepared the following amortization table. The interest rate used was 8%. Rode has made all of its payments exactly on the due date of May 1.
| beg bal | interest | pymt | Prin paid | end bal | |
| time zero | 90,999.93 | 20471.94 | (20,471.94) | 70,527.99 | |
| Yr 1 5/1/26 | 70,527.99 | 5,642.24 | 20471.94 | (14,829.70) | 55,698.29 |
| Yr. 2 5/1/27 | 55,698.29 | 4,455.86 | 20471.94 | (16,016.08) | 39,682.22 |
| Yr 3 5/1/28 | 39,682.22 | 3,174.58 | 20471.94 | (17,297.36) | 22,384.86 |
| Yr 4 5/1/29 | 22,384.86 | 1,790.79 | 20471.94 | (18,681.15) | 3,703.70 |
| Yr 5, 5/1/30 | 3,703.70 | 296.30 | 4000 | (3,703.70) | 0.00 |
Rode is preparing to close its financial statements for the year-ended December 31, 2027. What amount of interest should it accrue as a current liability related to this lease?
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Financial Accounting For Decision Makers
Authors: Eddie McLaney, Peter Atrill
4th Edition
9780273688471
