Grichuk Power leased high-tech electronic equipment from Kolten Leasing on January 1, 2018. Kolten purchased the...

4.1 Ratings (590 Votes)

Present Value of Minimum Lease Payments = $18500 x PVOAD(3%,8) = $18500 x 7.0197	$129,864.45
Lease Amortization Schedule
Period	Lease Payments	Effective Interest = 3% x Lease Balance	Decrease in Balance	Lease Balance
01/01/2018				$129,864.45
03/31/2018	$18,500.00	$3,895.93	$14,604.07	$115,260.38
06/30/2018	$18,500.00	$3,457.81	$15,042.19	$100,218.20
09/30/2018	$18,500.00	$3,006.55	$15,493.45	$84,724.74
12/31/2018	$18,500.00	$2,541.74	$15,958.26	$68,766.48
03/31/2019	$18,500.00	$2,062.99	$16,437.01	$52,329.48
06/30/2019	$18,500.00	$1,569.88	$16,930.12	$35,399.36
09/30/2019	$18,500.00	$1,061.98	$17,438.02	$17,961.34
12/31/2019	$18,500.00	$538.84	$17,961.16	$0.18
Total	$148,000.00	$18,135.73	$129,864.27

Journal Entries
Date	Account Titles	Debit	Credit
01/01/2018	Leased Equipment	$129,864.45
	Lease Payable		$129,864.45

01/01/2018	Lease Payable	$18,500.00
	Cash		$18,500.00

03/31/2018	Interest Expenses	$3,895.93
	Lease Payable	$14,604.07
	Cash		$18,500.00

06/30/2018	Interest Expenses	$3,457.81
	Lease Payable	$15,042.19
	Cash		$18,500.00

09/30/2018	Interest Expenses	$3,006.55
	Lease Payable	$15,493.45
	Cash		$18,500.00

12/31/2018	Interest Expense	$2,541.74
	Interest Payable		$2,541.74

12/31/2018	Depreciation Expenses = 129864.45/2	$64,932.22
	Accumulated Depreciation		$64,932.22

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Related Information:
Lease term	2 years (8 quarterly periods)
Quarterly lease payments	$18,500 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, andDec. 31 thereafter.
Economic life of asset	5 years
Interest rate charged by the lessor	12%

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