Rogers Company signs a five-year capital lease with Packer Company for office equipment. The annual year-end lease payment is $11,000, and the interest rate is 7%. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)

Complete the below table to calculate the present value of Rogerss five-year lease payments.

Lease Payment Amount		PV Factor		Present value of lease payments
			=

Record the capital lease of office equipment.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1

Complete a lease payment schedule for the five years of the lease with the following headings. Assume that the beginning balance of the lease liability is the present value of lease payments.

Period Ending Date	Beginning Balance of Lease Liability	Interest on Lease Liability	Reduction of Lease Liability	Cash Lease Payment	Ending Balance of Lease Liability
Year 1
Year 2
Year 3
Year 4
Year 5
Total

Record the annual depreciation expense on the office equipment at the end of year 1. (straight line depreciation).

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1