Rauch Incorporated leases a piece of equipment to Donahue Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,892 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $25,000, a book value of $20,000, and both parties expect a residual value of $8,250 at the end of the lease term, though this amount is not guaranteed. Rauch set the lease payments with the intent of earning a 5% return, and Donahue is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Prepare the lease amortization schedule(s) for Donahue for all 4 years of the lease. (Round answers to 0 decimal places, e. g. 5,275.)

Explanation:

DONAHUE CORPORATION Lease Amortization Schedule Annuity-Due Basis Reduction of Interest on Liability Lease Liability Annual Payment Lease Liability 4892 4892 4 892 1/1/22 1 1/1/237 4892

Lease Expense Schedule Interest on Amortization of Lease Liability ROU Asset Lease Expense (Straight-Line) Date Carrying Value of ROU Asset 1/1/20 4892 290 4892 12/31/20 12/31/21 12/31/22 12/31/23 4892 4892

Date Account Titles and Explanation Debit Credit 1/1/20 | Right-of-Use Asset 182141 T 18214 Lease Liability (To record the lease) 1/1/20 Lease Liability 4,892 T 4,892 Cash (To record lease payment) 12/31/20 Lease Expense 4,892 Lease Liability Right-of-Use Asset

[1/1/21 || Lease Liability 4.8921T Cash 4,892 12/31/21 - || Lease Expense 4,8921T 1 PPPTT Lease Liability 22649 Right-of-Use Asset 22649

Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset 18214 Lease Liability 22649 Cash 22649 (To record the lease) 11/1/20 1/1/20 | Lease Liability Lease Liability 4,892 4,892 Cash (To record lease payment) [12/31/20 Lease Expense 4892 Lease Liability 22649 T Right-of-Use Asset 22649

answerjointly by the fed and by the behavior of individuals who hold money and of banks in which money is held;