Answer:
The Journal entries are as follows:
(i) On December 31, 2020
Interest expense A/c Dr. $21,557
Lease Liability A/c Dr. $31,468
To cash $53,025
(To record the interest expense)
Workings:
Interest expense = [($2,49,000 - $53,025) × 11%]
= $21,557
Lease Liability = Cash - Interest expense
= $53,025 - $21,557
= $31,468
(ii) On December 31, 2020
Amortization expense A/c Dr. $41,500
To Accumulated Amortization (right of use) $41,500
(To record the amortization of right - of - use of asset)
Workings:
Amortization expense:
= $2,49,000 ÷ 6 years
= $41,500
