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The following facts pertain to a non-cancelable lease agreement between Pharoah Leasing Company and Shamrock Company, a lessee. Commencement date May 1, 2020 Annual lease
The following facts pertain to a non-cancelable lease agreement between Pharoah Leasing Company and Shamrock Company, a lessee. Commencement date May 1, 2020 Annual lease payment due at the beginning of each year, beginning with May 1, 2020 $19,656.69 Bargain purchase option price at end of $7,000 lease term Lease term 5 years Economic life of leased equipment 10 years Lessor's cost $65,000 Fair value of asset at May 1, 2020 $93,000 Lessor's implicit rate 6% Lessee's incremental borrowing rate 6 % The collectibility of the lease payments by Pharoah is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Prepare a lease amortization schedule for Shamrock for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) SHAMROCK COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Plus Interest on Reduction of Lease Date BPO Liability Liability Lease Liability 5/1/20 $ $ $ 5/1/20 5/1/21 5/1/22 5/1/23 5/1/24 4/30/25 Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020 and 2021. Shamrock's annual accounting period ends on December 31. Reversing entries are used by Shamrock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record the first lease payment) (To record interest expense) (To record amortization of the right-of-use asset) (To record interest expense) (To record amortization of the right-of-use asset)
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