Answer:
1. Jan. 1, 2021
Dr Right-of-use Asset $417,665
Cr Lease Liability $417,665
Jan. 1, 2021
Dr Lease Liability 61,000
Cr Cash 61,000
Dec. 31, 2021
Dr Lease Liability $25,870
Dr Interest Expense 35, 130
Cr Cash 61,000
Dec. 31, 2021
Dr Amortization Expense $41,230
Cr Right-of-use Asset $41,230
2. Jan. 1, 2021
Dr Lease Receivable $610,000
Cr Sales Revenue $610,000
Jan. 1, 2021
Dr Cash $61,000
Cr Lease Receivable $61,000
Dec. 31, 2021
Dr Cash $61,000
Cr Lease Receivable $61,000
Explanation:
1. Preparation of the appropriate entries for the lessee related to the lease on January 1, 2021 and December 31, 2021.
Jan. 1, 2021
Dr Right-of-use Asset $417,665
Cr Lease Liability $417,665
(To record lease)
Jan. 1, 2021
Dr Lease Liability 61,000
Cr Cash 61,000
(To record lease payment)
Dec. 31, 2021
Dr Lease Liability $25,870
($61,000-35,130)
Dr Interest Expense 35, 130
Cr Cash 61,000
(To record lease payment)
Dec. 31, 2021
Dr Amortization Expense $41,230 (412,300/10)
Cr Right-of-use Asset $41,230
(To record amortization)
2. Preparation of the appropriate entries for the lessor related to the lease on January 1, 2021 and December 31, 2021.
Jan. 1, 2021
Dr Lease Receivable $610,000
Cr Sales Revenue $610,000
($61,000*10)
(To record lease payment)
Jan. 1, 2021
Dr Cash $61,000
Cr Lease Receivable $61,000
(To record cash received)
Dec. 31, 2021
Dr Cash $61,000
Cr Lease Receivable $61,000
(To record cash received)
