Answer:
In 2022, Cullumber should record interest expense of $57,057.80.
Explanation:
The interest expense can be calculated using the following formula:
Interest expense = (Present value of lease payments - Annual payments at the beginning of each year) * Effective interest rate .................... (1)
Where:
Annual payments at the beginning of each year = $180,000
Present value of lease payments = $750,578
Effective interest rate = 10%
Substituting the values into equation (1), we have:
Interest expense = ($750,578 - $180,000) * 10% = $57,057.80
Therefore, Cullumber should record interest expense of $57,057.80 in 2022.
