(a) Prepare the January 1 journal entry at the start of the lease to record any asset or liability. (b) Prepare the January 1 journal entry to record the first $15,252 cash lease payment. (b) Prepare the journal entry to record the cash lease payment at the end of Year 1 and the end of Year 2. (c) Prepare the journal entry made at the end of each year to record straight-line amortization, assuming zero salvage value at the end of the six-year lease term.
On January 1, Haymark Corporation signs a six-year lease for a truck that is accounted for as a finance lease. The lease requires six $15,252 lease payments (the first at the beginning of the lease and the rest at December 31 of years 1 through 5). The present value of the six annual lease payments, at 6% interest, is $79,500. The lease payment schedule follows. (a) Prepare the January 1
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