Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased...
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Accounting
Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently purchased the equipment at a cost of $222,664.
Other information:
Lease term
3 years
Annual payments
$80,000 on January 1 each year
Life of asset
3 years
Fair value of asset
$222,664
Implicit interest rate
8%
Incremental rate
8%
There is no expected residual value. Required: Prepare appropriate journal entries for Low-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.)
Record the entry at the inception of the lease
Record the entry for annual payment receipt
Record the entry for interest revenue
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