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Huffy Co., a lessee, records a finance lease of machinery on January 1, 2020. The five...

Huffy Co., a lessee, records a finance lease of machinery on January 1, 2020. The five annual lease payments of $525,000 are made at the beginning of each year. The present value of the lease payments at 10% is $2,189,180. Huffy uses straight-line depreciation with no salvage value.    

  1. Prepare an amortization table for the life of the lease. Round all amounts to the nearest dollar.

Amortization Table

Lease Liability

Lease payment

Interest

Principal

2020

2021

2022

2023

2024

b. Prepare all of Huffy’s journal entries for 2020 and 2021 (10 points)

Date

Account Titles

Debit

Credit

Solutions

Expert Solution

Amortization Table-Huffy Corp.
Lease payment Interest Principal Lease Liability
2020 $2,189,180
2020 $525,000 $525,000 $1,664,180
2021 $525,000 $166,418 $358,582 $1,305,598
2022 $525,000 $130,560 $394,440 $911,158
2023 $525,000 $91,116 $433,884 $477,274
2024 $525,000 $47,727 $477,273 $1
In the Books of Huffy Corp.
Date Account Tittle Debit Credit
01-Jan-2020 Right of use asset $2,189,180.00
     Lease payabe $2,189,180.00
01-Jan-2020 Lease payabe $525,000.00
     Cash $525,000.00
31-Dec-2020 Amortization expense
(2189180/5)		 $437,836.00
     Right of use asset $437,836.00
01-Jan-2021 Interest expense $166,418.00
Lease Payable $358,582.00
Cash $525,000.00
31-Dec-2021 Amortization expense
(2189180/5)		 $437,836.00
     Right of use asset $437,836.00

ekkarill92 answered 2 years ago
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