Answer:
<u>(a) Prepare DU Journeys' journal entries for 2016, 2017, and 2018.</u>
Date            Account Title and Explanation    Debit($)     Credit($)
31/12/2016  Right of Use asset                          15,000
                    Lease Liability                                                    15,000
(to record lease of asset)
31/12/2017  Interest Expense                             1,200
                   Lease Liability                                 4,352.82
                   Cash                                                                    5,552.82
(to record interest expense and lease payment)
31/12/2017  Amortization Expense                     5,000
                   Right of use Asset                                               5,000
(to record amortization expense for right of use asset)
31/12/2018 Interest Expense                               851.77
                  Lease Liability                                   4,978.69
                  Cash                                                                      5,830.46
(to record interest expense and lease payment)
31/12/2018 Amortization Expense                      5,000
                  Right of use Asset                                                 5,000
(to record amortization expense for right of use asset)
Date: 31/12/2016
Annual Payment: -
Interest Expense: -
Reduction of Lease Liability: -
Lease Liability: $15,000
Depreciation Expense: -
Date: 31/12/2017
Annual Payment: $5,552.82
Interest Expense: $1,200
Reduction of Lease Liability: 4352.82
Lease Liability: 10647.18
Depreciation Expense: $5,000
Date: 31/12/2018
Annual Payment: $5,830.46
Interest Expense: 851.7744
Reduction of Lease Liability: 4978.6856
Lease Liability: -44331.5056
Depreciation Expense: $5,000
Date: 31/12/2019
Annual Payment: $6,121.98
Interest Expense: -3546.520448
Reduction of Lease Liability: - 44331.5056
Lease Liability: 0
Depreciation Expense: $5,000
(b) Consumer Price index means: book the same amount year to year for payment. The increase in CPI may be booked as an expense when incurred.