90.2K

Verified Solution

Link Copied!

Metlock Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 5 years and requires equal rental payments of $33,021 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $140,000, an estimated useful life of 5 years, and no estimated residual value. The appropriate interest rate is 9%. Click here to view factor tables. Prepare Metlocks 2019 and 2020 journal entries, assuming Metlock depreciates similar equipment it owns on a straight-line basis. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
12/31/1912/31/20	enter an account title To record lease liability on December 31 2019	enter a debit amount	enter a credit amount
	enter an account title To record lease liability on December 31 2019	enter a debit amount	enter a credit amount
	(To record lease liability)
12/31/1912/31/20	enter an account title To record lease payment on December 31 2016	enter a debit amount	enter a credit amount
	enter an account title To record lease payment on December 31 2016	enter a debit amount	enter a credit amount
	(To record lease payment)
12/31/1912/31/20	enter an account title To record interest expense on December 31 2020	enter a debit amount	enter a credit amount
	enter an account title To record interest expense on December 31 2020	enter a debit amount	enter a credit amount
	enter an account title To record interest expense on December 31 2020	enter a debit amount	enter a credit amount
	(To record interest expense)
12/31/1912/31/20	enter an account title To record amortization of the right-of-use asset on December 31 2020	enter a debit amount	enter a credit amount
	enter an account title To record amortization of the right-of-use asset on December 31 2020	enter a debit amount	enter a credit amount
	(To record amortization of the right-of-use asset)

Answer & Explanation Solved by verified expert

See Answer