CALCULATOR MESSAGE MY INSTRUCTOR FULL SCREEN PRINTER VERSION BACK Brief Exercise

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CALCULATOR MESSAGE MY INSTRUCTOR FULL SCREEN PRINTER VERSION BACK Brief Exercise 21-4 Your answer is partially correct. Try again. Ivanhoe Corporation recorded a capital lease at $284,000 on January 1, 2017. The interest rate is 13%, lvanhoe Corporation made the first lease payment of $52,373 on payments. The equipment has a useful life of 8 years with no salvage value Assume that at December 31, 2017, Ivanhoe made an adjusting entry to accrue interest expense of $30,112 on the lease. Prepare Ivanhoe's January 1, 2018, journal entry to record the second lease payment of $52,373. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entr is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to o decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit January 1, 2018in 27218 Lease Liability Cesh Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT oints based on the Point Potential Policy set by your instructor By accessing this Question Assistance, you will learn while you earn p All Rights Reserved. A Division of re to search

Explanation / Answer

Solution :

Given that the accued interest for Dec 31,2017 is 30,112. The amount is derived as 13% on ( 284000-52373).

This interest amount which was accued would be repaid in the form of installmanet paid on 1st January 2018.

The installment of 52,373 would contain two parts i.e. accured interest amount and the balance would be the lease liability to the tune of 22,261.

the Journal entry would be :

Accued Interest A/c ...... Dr 30,112

Lease liability A/c ...... Dr 22,261

To cash/Bank A/c 52,373

( being second installment recorded on 1st January 2018.)

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