Natick Industries leased high-tech instruments from Framingham Leasing on January 1, 2018. Natick has the option...

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	Present Value of Lease Payments
	Quarterly Lease payments		$ 21,000
	PV of annuity of $1, n=20, i=3%		15.32380
	Present value of Lease payments		$ 321,800


Date	Account	Debit	Credit

Jan 1 2018	Right of use asset	$ 321,800
	Lease Payable		$ 321,800
	(To record lease by lessee)

Jan 1 2018	Lease Payable	$ 21,000
	Cash		$ 21,000
	(To record first payment)

Mar 31 2018	Interest Expense [3%*($321,800-$21,000)]	$ 9,024
	Lease Payable (Plug in)	$ 11,976
	Cash		$ 21,000
	(To record second payment)

Mar 31 2018	Amortization Expense ($321,800/20 Q)	$ 16,090
	Right of use asset		$ 16,090
	(To record amortization expense)

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Related Information:
Lease term	2 years (8 quarterly periods)
Lease renewal option for an additional	3 years (12 quarterly periods)
Quarterly lease payments	$21,000 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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