Presented below are two independent situations.
1. Speedy Car Rental leased a car to Metnik SA for 1 year. Terms of the operating lease agreement call for monthly payments of R$720.
2. On January 1, 2017, Burke SA entered into an agreement to lease 20 computers from Cloud Electronics. The terms of the lease agreement require three annual rental payments of R$40,000 (including 8% interest) beginning December 31, 2017. The present value of the three rental payments is R$103,084. Burke considers this a finance lease.
Instructions
(a) Prepare the appropriate journal entry to be made by Metnik for the first lease payment.
(b) Prepare the journal entry to record the lease agreement on the books of Burke on January 1, 2017.