Edison Leasing leased high-tech electronic equipment to Manufacturers Southern o
ID: 2328532 • Letter: E
Question
Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2018. Edison purchased the equipment from International Machines at a cost of $127,024. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
Prepare a lease amortization schedule and appropriate entries for Edison Leasing from the beginning of the lease through January 1, 2019. Edison’s fiscal year ends December 31.
Explanation / Answer
1 Quarterly Interest Rate 0.02 8%/4 Lease Amortization Schedule Period Lease Payments Interest Expense Decrease in Balance Lease Balance $127,024 1 $17,000 $17,000 $110,024 2 $17,000 $2,200 $14,800 $95,224 3 $17,000 $1,904 $15,096 $80,129 4 $17,000 $1,603 $15,397 $64,732 5 $17,000 $1,295 $15,705 $49,026 6 $17,000 $981 $16,019 $33,007 7 $17,000 $660 $16,340 $16,667 8 $17,000 $333 $16,667 $0 $136,000 $8,976 $127,024 Interest Expense = Lease Balance*Quarterly Interest Rate 2 Date Particulars Debit Credit 01.01.2018 Lease Receivable $127,024 To Inventory of Equipment $127,024 (Being Lease receivable) 01.01.2019 Cash $17,000 To Lease Receivable $17,000 (Lease received for Jan-Mar quarter) 31.03.2019 Cash $17,000 To Interest revenue $2,200 To Lease receivable $14,800 (Lease Received for April-June quarter) 30.06.2019 Cash $17,000 To Interest revenue $1,904 To Lease receivable $15,096 (Lease Received for July-Sept quarter) 30.09.2019 Cash $17,000 To Interest revenue $1,603 To Lease receivable $15,397 (Lease Received for Oct-Dec quarter) 31.12.2019 Cash $17,000 To Interest revenue $1,295 To Lease receivable $15,705 (Lease Received for Jan-Mar quarter)
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