On January 1, Haymark Corporation leased a truck, agreeing to pay $15,252 every December 31 for the six-year life of the lease. The present value of the lease payments, at 6% interest, is $75,000. The lease is considered a finance lease.(a) Prepare the general journal entry to record the acquisition of the truck with the finance lease.(b) Prepare the general journal entry to record the first lease payment on December 31.(c) Record straight-line depreciation on the truck on December 31, assuming a 6-year life and no salvage value.
What will be an ideal response?
| (a) | 1/1 | Leased Asset-Truck | 75,000 | ? |
| ? | ? | Lease Liability | ? | 75,000 |
| ? | ? | ? | ? | ? |
| (b) | 12/31 | Interest Expense | 4,500 | ? |
| ? | ? | Lease Liability | 10,752 | ? |
| ? | ? | Cash | ? | 15,252 |
| ? | ? | Calculation: Interest expense = $75,000 * .06 = $4,500 | ? |
| ? | ? | ? | ? | ? |
| (c) | 12/31 | Depreciation Expense-Truck | 12,500 | ? |
| ? | ? | Accumulated Depreciation-Truck | ? | 12,500 |
| ? | ? | Calculation: $75,000/6 years = $12,500/year | ? | ? |
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