On January 1, 2020, Goldman Corporation signed an eight-year capital lease on an office building requiring annual lease payments of $7,500, with the first payment due immediately. Annual lease payments are made each January 1. The present value of the seven future lease payments at 10% interest per year is $36,510. The building is expected to have a 10 year life. The lease contains an option for the lessee to purchase the office building for $1 at the end of the lease.

Required:

Record the following journal entries for Goldman Corporation

a) The signing of the lease and the payment of the first annual lease payment.

b) Amortization on the leased asset using straight-line amortization at December 31, 2020.

c) The interest accrual on the capital lease at December 31, 2020.

d) The second lease payment on January 1, 2021.

Answer rating: 100% (QA)

a The signing of the lease and the payment of the first annual le... View the full answer