On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%.

• The contract calls for four rent payments of $20,000 each, payable semiannually on June 30 and December 31 each year.
• The computers were acquired by ComputerWorld at a cost of $110,000 and were expected to have a useful life of eight years with no residual value.
• Both firms record amortization and depreciation semiannually.

Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

Required:

1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease.

Record the beginning of the lease for Nath-Langstrom Services.

right of use asset-- lease payable

Record the lease payment made by Nath-Langstrom Services.

interest expense--lease payable--cash

Record amortization for Nath-Langstrom Services.

amortization expense-- right of use asset

Record the lease payment made by Nath-Langstrom Services

interest expense--lease payable

Record amortization for Nath-Langstrom Services.

amortization expense--right of use asset

2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease.

Record the beginning of the lease for ComputerWorld Leasing.

no journal entry required

Record the lease payment received by ComputerWorld Leasing

cash--lease revenue

Record depreciation for ComputerWorld Leasing

depreciation expense-- accumulated depreciation

Record the lease payment received by ComputerWorld Leasing.

cash--lease revenue

Record depreciation for ComputerWorld Leasing.

depreciation expense--accumulated depreciation