Share
Explore BrainMass

Amortization schedule for lease

Started the problem but I'm having trouble with it and I don't know if the work I did is correct or not.
Windom co. as lessee records a capital lease of machinery on January 1, 2008. The seven annual lease payments of 350,000 are made at the end of each year. The present value of the lease payments at 10% is 1,704,000. Windom uses the effective-interest method of amortization and sum-of-the-years'-digits depreciation (no residual value).

Instructions (Round to the nearest dollar.)

(a) Prepare an amortization table for 2008 and 2009.
(b) Prepare all of Windom's journal entries for 2008.

Attachments

Solution Preview

Please see the attached file

Windom co. as lessee records a capital lease of machinery on January 1, 2008. The seven annual lease payments of 350,000 are made at the end of each year. The present value of the lease payments at 10% is 1,704,000. Windom uses the effective-interest method of amortization and sum-of-the-years'-digits depreciation (no residual value).

Instructions (Round to the nearest dollar.)

(a) Prepare an amortization table for 2008 and 2009.
(b) Prepare all of Windom's journal entries for 2008.

a) Date Annual Lease payment Interest ...

Solution Summary

The solution explains how to make an amortization schedule for a lease transaction and the related journal entries

$2.19