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Chapter 21 - Lease Example 1

Chapter 21 - Lease Example 1 - Before deciding to lease...

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Lease Example 1 (Adapted from Spiceland 2004) On January 1, 2003, Sans Serif Publishers, Inc. a computer services and printing firm, leased a color copier from CompuDec Corporation. The lease agreement specifies four annual payments of $100,000 beginning January 1, 2003, the inception of the lease, and at each January 1 through 2006. The useful life of the copier is estimated to be six years.
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Unformatted text preview: Before deciding to lease, Sans Serif considered purchasing the copier for its cash price of $479,079. If funds were borrowed to buy the copier, the interest rate would have been 10%. How should this lease be classified? Provide the journal entries recorded at: 1. at the time of each of the four payment dates. 2. at the end of each year....
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