Journal entry for finance lease

timer Asked: Apr 23rd, 2017

Question description

  1. On 12/1/16 Choice leased a new machine. The machine normally sells for $23,500. The applicable interest rate is 8%. The lease term is 5 years and the machine has a useful life of 6 years. Annual payments begin December 1 2016, and due each subsequent year annually. There is no BPO; there is no transfer of ownership. Record the new capital lease and first payment made on 12/1/16. Round to the nearest dollar.
  2. Regarding the above lease transaction, you do not need to do a complete amortization table. However, you do need to accrue the interest for 1 month (the month of December) in an adjusting entry dated 12/31/16. Also, do not worry about depreciation expense. Let’s just assume it’s included in the current depreciation expense.

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