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4 years ago

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Wilson foods corporation leased a commercial food processor on september 30, 2018. the five-year finance lease agreement calls f

or wilson to make quarterly lease payments of $195,774, payable each september 30, december 31, march 31, june 30, with the first payment at september 30, 2018. wilson's incremental borrowing rate is 12%. wilson records amortization on a straight-line basis at the end of each fiscal year. wilson recorded the lease as follows:

1 answer:

ella [17]4 years ago

8 0

Answer:

The journal entry to record the lease would be:

Debit Credit

Asset $3,000,000

Lease Payable $3,000,000

Debit Credit

Lease Payable $195,774

Cash $195,774

Explanation:

To prepare the journal entry to record the lease we would have to calculate the present value of lease payments as follows:

present value of lease payments=$195,774*15.32380=$3,000.000

Therefore, the journal entry to record the lease would be:

Debit Credit

Asset $3,000,000

Lease Payable $3,000,000

Debit Credit

Lease Payable $195,774

Cash $195,774

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The question is incomplete:

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<em />

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