A 1. telephone system is acquired under a lease to own agreement on August 1, 2006. The value of
the telephone system is $2,500.00; payments will be $180.00 a month for 2 years starting on September 1, 2006.
The telephone system cost the lessor $1,400.00
Create the payment schedule and the journal entries for August 1, 2006 and September 1, 2006
for the lessor.
38,930.00 Leased Equip Receivable
Leased Equip Revenue
COGS
Inventory-Telephone
2,500.00
(2,500.00)
1,400.00
(1,400.00)
38,961.00 Cash
Interest Income
Leased Equip Receivable
180.00
(75.83)
(104.17)
Pmt
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
38,961.00
38,991.00
39,022.00
39,052.00
39,083.00
39,114.00
39,142.00
39,173.00
39,203.00
39,234.00
39,264.00
39,295.00
39,326.00
39,356.00
39,387.00
39,417.00
39,448.00
39,479.00
39,508.00
39,539.00
39,569.00
39,600.00
39,630.00
39,661.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
180.00
4,320.00
2500/24
Interest
Principle
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
75.83
104.17
1,820.00
2,500.00
2,500.00
2,395.83
2,291.67
2,187.50
2,083.33
1,979.17
1,875.00
1,770.83
1,666.67
1,562.50
1,458.33
1,354.17
1,250.00
1,145.83
1,041.67
937.50
833.33
729.17
625.00
520.83
416.67
312.50
208.33
104.17
-
2. A back-hoe is acquired under a lease to own agreement on February 1, 2006. The value of the
back-hoe is $125,000.00. The terms of the agreement are 25 monthly payments at a 24% annual
interest starting on the date of purchase. The lessor purchased the back-hoe $95,000.00
Create for the payment schedule and the journal entries for February 1, 2006 and
January 1, 2008 for both the lessor and lessee.
Lessor
2/1/2006 Leased Equip Receiv
Leased Equip Revenue
Cash
COGS
Inventory
Lessee
Leased Equip
Lease Obligation
Cash
94,860.85
(125,000.00)
30,139.15
95,000.00
(95,000.00)
1/1/2008 Cash
Interest Income
Leased Equip Receiv
Amount
Interest
# of pmt
Payment
125,000.00
0.24
25.00
$30,139.18
Interest
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
3.
Lease Obligation
Interest Expense
Cash
38,749.00
38,777.00
38,808.00
38,838.00
38,869.00
38,899.00
38,930.00
38,961.00
38,991.00
39,022.00
39,052.00
39,083.00
39,114.00
39,142.00
39,173.00
39,203.00
39,234.00
39,264.00
39,295.00
39,326.00
39,356.00
39,387.00
39,417.00
39,448.00
39,479.00
1,897.22
1,332.38
Principle
30,139.18
28,241.97
125,000.00
94,860.82
66,618.85
An operating lease is set-up for an office furniture suite for $59.95 per month starting on August 15, 2011.
The value of the office furniture suite is $1,300.00. After the first 3 monthly payments were made, the lessee
decides to purchase the living room suite for $1,250.00 on October 30, 2011. On October 30, 2011, there
was $182.00 of accumulated depreciation on the office suite recorded by the lessor.
Record all the applicable journal entries for both the lessor and lessee.
Lessor
8/15/2011 Fixed Asset
Cash
Lessee
1,300.00
(1,300.00)
Cash
Leased Equp Receiv
59.95
(59.95)
Leased Equip Exp
Cash
59.95
(59.95)
9/15/2011 Cash
Leased Equp Receiv
59.95
(59.95)
Leased Equip Exp
Cash
59.95
(59.95)
10/15/2011 Cash
Leased Equp Receiv
59.95
(59.95)
Leased Equip Exp
Cash
59.95
(59.95)
10/30/2011 Cash
Fixed Asset
Accum Depreciation
Loss on Sale
1,250.00
(1,300.00)
182.00
(132.00)
Office Furniture
Cash
1,250.00
(1,250.00)
125,000.00
(94,860.85)
(30,139.15)