Feedback Partially correct c. Calculate the amount of depreciation expense for the year 2017. Round answer to the nearest whole dollar. $fill in the blank 6c5c3801307d07a_1 d. At what amount would the lease obligation be presented on the balance sheet as of December 31, 2017? Round answers to the nearest whole dollar. Current liability portion $fill in the blank 6c5c3801307d07a_2 Long-term liability portion $fill in the blank 6c5c3801307d07a_3
Identify and analyze the transaction by using the following steps:
1. Determine activity – operating, investing or financing.
2. Determine accounts affected and the amount of increases/decreases.
3. Determine the financial statements affected –
The
Determine amortization using the effective interest method (see Exhibit 10-7 below for an example).
| Date | Column 1 Lease Payment |
Column 2 Interest Expense |
Column 3 Reduction of Obligation |
Column 4 Lease Obligation |
| 8% | Col. 1 - Col. 2 | |||
| 1/1/2017 | - | - | - | $15,972 |
| 12/31/2017 | $4,000 | $1,278 | $2,722 | 13,250 |
| 12/31/2018 | 4,000 | 1,060 | 2,940 | 10,310 |
| 12/31/2019 | 4,000 | 825 | 3,175 | 7,135 |
| 12/31/2020 | 4,000 | 571 | 3,429 | 3,706 |
| 12/31/2021 | 4,000 | 294 | 3,706 | 0 |
Column 1 is the total amount of the payment. To compute the interest expense, (column 2) multiply the lease obligation (column 4) by the interest rate. Column 3, the reduction of obligation is computed by subtracting Column 2 from column 1. Column 4 starts out as the present value of the lease obligation. This column is then reduced by the amount in column 3.
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Round answers to the nearest whole dollar.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
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fill in the blank bc903f01b05f000_4 | fill in the blank bc903f01b05f000_5 |
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fill in the blank bc903f01b05f000_7 |
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c. Calculate the amount of
$fill in the blank 6c5c3801307d07a_1
d. At what amount would the lease obligation be presented on the balance sheet as of December 31, 2017? Round answers to the nearest whole dollar.
| Current liability portion | $fill in the blank 6c5c3801307d07a_2 |
| Long-term liability portion | $fill in the blank 6c5c3801307d07a_3 |
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