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TeamB Company signs a lease agreement dated January 1, 2019, that provides for it to...

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Accounting

TeamB Company signs a lease agreement dated January 1, 2019, that provides for it to lease equipment from Lamba Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows:

  • The lease is noncancelable and has a term of 5 years.

  • The annual rentals are $83,222.92, payable at the end of each year, and provide

    Lamba with a 12% annual rate of return on its net investment.

  • There is no renewal or bargain purchase option.

  • The Present Value factor is 3.604776

    TeamB uses the straight-line method to record depreciation on similar equipment.

    Required:

    1. Calculate the amount of the asset and liability of TeamB at the inception of the lease. (Round to the nearest dollar.)

    2. Prepare a table summarizing the lease payments and interest expense.

    3. Prepare journal entries on the books of TeamB for 2019.

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