On January 1, the lessee company signed an operating lease contract. The lease contract calls for $3,000 payments at the end of each year for 10 years. The rate implicit in the lease is 10%.

Assume that the lease is to be accounted for as a capital lease. Also assume that the leased asset is to be amortized over the 12-year asset life rather than the 10-year lease term.
1. Make the journal entry necessary on the books of the lessee company on the lease-signing date. Round your answer to the nearest whole dollar.

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2. Make the journal entries necessary on the books of the lessee company at the end of the first year, including the recording of the first lease payment. Round your answers to the nearest whole dollar. For compound transactions, if an amount box does not require an entry, leave it blank.

Answer rating: 100% (QA)

Required solution The answer is computed as follows Compute the cost of asset Year Rental Payments D... View the full answer