Problem 1
Hood lease equipment from Ford on January 1, 2019. Fordpurchased the equipment from a manufacturer at a cost of$250,000,its fair value. Terms of the lease are as follows:
Lease term 2 years, (8 quarterly periods)
Quarterly payments, $15,000 beginning Jan 1, 2019
Economic life of asset, 5 years
Interest rate charged by lessor,10%
Required:
Prepare appropriate journal entriesfor the lessee through December 31, 2019. Appropriate adjustingentries are recorded at the end of the fiscal year.
