Rick Kleckner Corporation recorded a finance lease at $410,000 on January 1, 201

Question

Rick Kleckner Corporation recorded a finance lease at $410,000 on January 1, 2014. The interest rate is 10%. Kleckner Corporation made the first lease payment of $85,581 on January 1, 2014. The lease requires eight annual payments. The equipment has a useful life of 6 years with no residual value. Assume that at December 31, 2014, Kleckner made an adjusting entry to accrue interest expense of $32,442 on the lease. Prepare Kleckner’s January 1, 2015, journal entry to record the second lease payment of $85,581. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

Explanation / Answer

Date : Jan. 1, 2015

Debit Interest Payable $32,442

Debit Lease Liability $53,139

Credit Cash $85581

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