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Teal Mountain Corporation recorded a right-of-use asset for $312,900 as a result of a finance lease on December 31, 2019. Teal Mountain’s incremental borrowing rate is 10%, and the implicit rate of the lessor was not known at the commencement of the lease. Teal Mountain made the first lease payment of $58,429 on on December 31, 2019. The lease requires 7 annual payments. The equipment has a useful life of 7 years with no residual value.
Prepare Teal Mountain's December 31, 2017, entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places e.g. 5,275.)
Date Account Titles and Explanation Debit Credit
December 31, 2017

Sagot :

Tundexi

Answer:

Date           Account titles and Explanation         Debit       Credit

31 Dec 19   Lease liability                                     $32,982

                  Interest expense                                $25,447

                  [(312900-58,429)*10%]

                          Cash                                                              $58,429

                   (To record interest expense)

31 Dec 19   Amortization expense                        $44,700

                  [312,900/7]

                          Right of use asset                                         $44,700

                  (To record amortization of the right of use asset)

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