Question
Warrior Inc. leased a commercial generator from Portland Inc. on January 1, 2021 under a 2-year operating lease . Quarterly payments of $21,000 are due
Warrior Inc. leased a commercial generator from Portland Inc. on January 1, 2021 under a 2-year operating lease. Quarterly payments of $21,000 are due at the beginning of each quarter with the first payment due on January 1, 2021. Portland purchased the generator from Magnum Corp. at a cost of $256,000, which is also its fair value. The economic life of the generator is 5 years and the interest rate implicit in the lease is 8%. Warrior records amortization every quarter.
What is the balance in the lease payable at July 1, 2021?
| A. | $104,367 |
| B. | $95,349 |
| C. | $117,630 |
| D. | $98,983 |
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Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
6th edition
1118096894, 978-1-11921511, 978-1118096895
