Question

Illini leases another piece of equipment from Cubs Corporation under a four-year lease agreement on 1/1/20x1. The lease specifies annual payments on each 1/1 and the first payment of $10,000 is made on 1/1/20x1. The lease also specifies a 3% annual increase in the lease payments. The equipment has a fair value of $100,000 on 1/1/20x1. The expected useful life of the equipment is 10 years with no residual value. The equipment will be returned to Cubs at the end of the lease term. The implicit rate is 10%.

So far, i know that on 1/1/20x1 for A and B the amount is 36341 USD.

For C and D - 10000 USD.

For F - 2634 USD

For H - 7666 USD

For I - 2634 USD

For J - 10300 USD

For L - 1868 USD

As i know the amortization of 9085 USD/year is not correct. Don't know why. Do you have any suggestions?

Date	Account Name (Debit)	Account Name (Credit)	Debit	Credit
1/1/20X1	ROU assets		[A]
		Lease obligation		[B]
1/1/20X1	Lease obligation		[C]
		Cash		[D]
12/31/20X1	Rental expense		[E]
		Accrued interest		[F]
		ROU assets		[G]
1/1/20X2	Lease obligation		[H]
	Accrued interest		[I]
		Cash		[J]
12/31/20X2	Rental expense		[K]
		Accrued interest		[L]
		ROU assets		[M]

Answer 1