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On January 1 of Year 1, Kamili Company leased a truck for a 7-year period under...

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Accounting

On January 1 of Year 1, Kamili Company leased a truck for a7-year period under a capital lease and agreed to pay an annuallease payment of $6,000 at the end of each year. The interest rateassociated with this capital lease is 12% compounded annually. OnDecember 31 of Year 1,the first $6,000 payment was made asscheduled. The entry to record the payment of the first $6,000payment on December 31 of Year 1includes

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Year 1 Journal entry for Lease Payment Date General Journal Debit Credit December 31 Lease Obligation 271410 Interest Expense 328590 Cash 600000 Lease installment paid in year 1 Working note 1 Calculation of    See Answer
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Transcribed Image Text

On January 1 of Year 1, Kamili Company leased a truck for a7-year period under a capital lease and agreed to pay an annuallease payment of $6,000 at the end of each year. The interest rateassociated with this capital lease is 12% compounded annually. OnDecember 31 of Year 1,the first $6,000 payment was made asscheduled. The entry to record the payment of the first $6,000payment on December 31 of Year 1includes

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