Question

Host Co as a lessor records a sales type lease of machinery on 1/1/19. The 7 annual lease payments of $210,000 are received at the end of each year. The present value of the lease payments at 10% is $1,022,400.

Prepare a lease amortization schedule from 1/1/19 to 12/31/21.

Prepare the journal entries for Host from 1/1/19 to 12/31/20.

SHOW ALL COMPUTATIONS.

**This ia for a lessor not lessee.

Answer 1

a.)	Amortization Schedule	A	B	C= A-B	D
	Date	Lease Payment	Interest Revenue	Reduction in	Lease
			@ 10% of D	lease receivable	Receivable
	1/1/2019				1,022,400
	12/31/2019	210,000	102,240	107,760	914,640
	12/31/2020	210,000	91,464	118,536	796,104
	12/31/2021	210,000	79,610	130,390	665,714
b.)	Date	Account Titles	Debit $	Credit $
	1/1/2019	Lease Receivable	1,022,400
		Machine		1,022,400
	12/31/2019	Cash	210,000
		Lease Receivable		107,760
		Interest Revenue		102,240
	12/31/2020	Cash	210,000
		Lease Receivable		118,536
		Interest Revenue		91,464