On January 1, 2024, Rick's Pawn Shop leased a truck from Corey Motors for a seven-year...
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On January 1, 2024, Rick's Pawn Shop leased a truck from Corey Motors for a seven-year period with an option to extend the lease for three years. Rick's had no significant economic incentive as of the beginning of the lease to exercise the three-year extension option. Annual lease payments are $13,500 due on December 31 of each year, calculated by the lessor using a 4% interest rate. The agreement is considered an operating lease. 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 Rick's journal entry to record for the right-of-use asset and lease liability on January 1, 2024. 2. Prepare the journal entries to record interest and amortization on December 31, 2024. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare Rick's journal entry to record for the right-of-use asset and lease liability on January 1, 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount. View transaction list View journal entry worksheet No 1 Date General Journal January 01, 2024 Right-of-use asset Lease payable Debit Credit On January 1, 2024, Rick's Pawn Shop leased a truck from Corey Motors for a seven-year period with an option to extend the lease for three years. Rick's had no significant economic incentive as of the beginning of the lease to exercise the three-year extension option. Annual lease payments are $13,500 due on December 31 of each year, calculated by the lessor using a 4% interest rate. The agreement is considered an operating lease. 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 Rick's journal entry to record for the right-of-use asset and lease liability on January 1, 2024. 2. Prepare the journal entries to record interest and amortization on December 31, 2024. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare Rick's journal entry to record for the right-of-use asset and lease liability on January 1, 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount. View transaction list View journal entry worksheet No 1 Date General Journal January 01, 2024 Right-of-use asset Lease payable Debit Credit
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To prepare Ricks journal entry to record the rightofuse asset and lease liability on January 1 2024 ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Posted Date:
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