Question

Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2018. Edison purchased the equipment from International Machines at a cost of $119,300. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Related Information:
Lease term	2 years (8 quarterly periods)
Quarterly rental payments	$16,500 at the beginning of each period
Economic life of asset	2 years
Fair value of asset	$119,300
Implicit interest rate	12%
(Also lessee’s incremental borrowing rate)

Required:

Prepare a lease amortization schedule for Edison Leasing from the beginning of the lease through January 1, 2019. Edison’s fiscal year ends December 31. (Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.)

	Payment date Lease Payments Effective Interest Decrease in Balance Lease Balance 01/01/2018 01/01/2018 04/01/2018 07/01/2018 10/01/2018 01/01/2019 04/01/2019 07/01/2019 10/01/2019 Total $0 $0 $0

Prepare the appropriate General Journal entries for Edison Leasing from the beginning of the lease through January 1, 2019. Edison’s fiscal year ends December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to nearest whole dollar.)

1. Record the lease.

2.Record cash received.

3 Record cash received.

4. Record cash received.

5. Record cash received.

6. Record interest receivable.

7.Record cash received..

Answer 1

1)LEASE AMORTIZATION SCHEDULE

PAYMENT 411DATE	LEASE PAYMENTS	INTEREST EXPENSE	DECREASE IN BALANCE	LEASE BALANCE
01/01/2018				$119,300
01/01/2018	16500	0	16500	$102,800
04/01/2018	16500	3084(102800*12%*3/12)	13416(16500-3084)	$89,384
07/01/2018	16500	2682	13818	$75,566
10/01/2018	16500	2267	14233	$613,33
01/01/2019	16500	1840	14660	$46,673
04/01/2019	16500	1400	15100	$31,573
07/01/2019	16500	947	15553	$16,020
10/01/2019	16500	480	16020	0
TOTAL	$132000	$12,700	$119,300

2.JOURNAL IN BOOKS OF EDISON LEASING

DATE	PARTICULARS	REF. NO.	DEBIT($)	CREDIT($)
01/01/2018	LEASE RECEIVABLE		119,300
	SALES REVENUE			119,300
	CASH		16500
	LEASE RECEIVABLE			16500
04/01/2018	CASH		16500
	LEASE RECEIVABLE			13416
	INTEREST RECEIVABLE			3084
07/01/2018	CASH		16500
	LEASE RECEIVABLE			13818
	INTEREST RECEIVABLE			2682
10/01/2018	CASH		16500
	LEASE RECEIVABLE			14233
	INTEREST RECEIVABLE			2267
01/01/2019	CASH		16500
	LEASE RECEIVABLE			14660
	INTEREST RECEIVABLE			1840
04/01/2019	CASH		16500
	LEASE RECEIVABLE			15100
	INTEREST RECEIVABLE			1400
07/01/2019	CASH		16500
	LEASE RECEIVEABLE			15553
	INTEREST RECEIVABLE			947
10/01/2019	CASH		16500
	LEASE RECEIVABLE			16020
	INTEREST RECIEVABLE			480