Question: Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2024. Hi-Tech manufactured the equipment at a cost of $88,000. Lease term: 4 years

Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2024. Hi-Tech manufactured the equipment at a cost of $88,000.

Lease term: 4 years

Annual payments: $36,000 on January 1 each year

Life of asset: 4 years

Fair value of asset: $128,776

Implicit interest rate: 8%

Incremental Rate: 8%

There is no expected residual value.

Required:

Prepare appropriate journal entries for Hi-Tech Leasing for 2024. Assume a December 31 year-end.

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