Eye Deal Optometry leased vision-testing equipment from Insight Machines on January 1, 2018. Insight Machines manufactured the equipment at a cost of $400,000 and lists a cash selling price of $459,714. Appropriate adjusting entries are made quarterly Related Information:
Lease term 5 years (20 quarterly periods)
Quarterly lease payments $30,000 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter.
Economic life of asset 5 years
Interest rate charged by the lessor
12%
Required:
1. Prepare appropriate entries for Eye Deal to record the arrangement at its beginning, January 1, 2018, and on March 31, 2018.
Jan 1, 2018 -Record the beginning of the lease for Eye Deal.
Jan 1, 2018-Record the quarterly rental paid by Eye Deal.
March 31,2018- Record the quarterly rental and interest paid by Eye Deal.
March 31, 2018- Record Ammortization of right of use equipment for eye deal
2. Prepare appropriate entries for Insight Machines to record the arrangement at its beginning, January 1, 2018, and on March 31, 2018.
Jan 1, 2018- Record the beginning of the lease for Insight Machines.
Jan 1, 2018- Record the lease revenue recieved by insight machines.
March 31, 2018- Record the lease revenue and interest recieved by insight machines