On January 1, 2018, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under...

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Accounting

On January 1, 2018, Nath-Langstrom Services, Inc., a computersoftware training firm, leased several computers under a two-yearoperating lease agreement from ComputerWorld Leasing, whichroutinely finances equipment for other firms at an annual interestrate of 4%. The contract calls for four rent payments of $15,500each, payable semiannually on June 30 and December 31 each year.The computers were acquired by ComputerWorld at a cost of $101,000and were expected to have a useful life of Five years with noresidual value. Both firms record amortization and depreciationsemi-annually. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of$1 and PVAD of $1) (Use appropriate factor(s) from thetables provided.)

Required:
Prepare the appropriate entries for both the lessee and the lessorfrom the beginning of the lease through the end of 2018

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Solution Journal Entries NathLangstrom Services Inc Date Particulars Debit Credit 1Jan18 Right of use asset Dr 5902000 To Lease Payable 15500 380773 5902000 To record right of use assets on lease 30Jun18 See Answer

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