Can someone help me with this please Mike Macinski Leasing Company leases a new

Question

Can someone help me with this please

Mike Macinski Leasing Company leases a new machine that has a cost and fair value of $85,300 to Sharrer Corporation on a 3-year noncancelable contract. Sharrer Corporation agrees to assume all risks of normal ownership including such costs as insurance, taxes, and maintenance. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2014. Mike Macinski Leasing Company expects to earn a 9% return on its investment. The annual rentals are payable on each December 31.

Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved.

(Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

Rent Receipt/ Payment Interest Revenue/ Expense Reduction of Principal Receivable/Liabilit 12/31/14 12/31/15 12/31/16

Explanation / Answer

Annual Rent Payment = fair value/PVIFA(9%,3)

Annual Rent Payment = 85300/2.53129

Annual Rent Payment = $ 33698

Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved.

Rent Reciept / Payment Interest Revenue/ Expenses Reduction of Principal Recievable/Liability 1/1/14 85300 12/31/14 33698 7677 26021 59279 12/31/15 33698 5335 28363 30916 12/31/16 33698 2782 30916 0

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