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Micro Inc. uses computer monitoring devices for manufacturing quality control. Because the type and speed...

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Accounting

Micro Inc. uses computer monitoring devices for manufacturing quality control. Because the type and speed of manufacturing vary from year to year, Micro has entered into a three-year lease of monitoring equipment. The equipment has a $100,000 market value and a 10-year useful life. The lease, signed on December 31, 2003, specifies that there is no title transfer or bargain purchase option at the end of the lease on December 31, 2006. Micro does not guarantee any of the residual value. The lessor has set the lease payments at $25,106, with the first payment due December 31, 2004. Micro doesnt know the implicit rate of the lessor; Micros incremental borrowing rate is 12%. Micro uses straight-line depreciation. (use Statement of Cash Flows, Income statement, Balance sheet to show the answer)

Journal entry option: Prepare any 2003 journey entries related to the lease. Also, make the December 31, 2006, journal entry at the end of the lease. You can round the number if necessary.

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