On January 1, 2018. Winn Heat Transfer leased office space under a three year op
ID: 2395738 • Letter: O
Question
On January 1, 2018. Winn Heat Transfer leased office space under a three year operating lease agreement. The arrangement specified three annual rent payments of $72,000 each, beginning December 31, 2018, and at each December 31 through 2020. The lessor, HVAC Leasing calculates lease payments based on an annual interest rate of 8%. Winn also paid a $156,000 advance payment at the beginning of the lease in addition to the first $72,000 rent payment. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $228,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Requlrec Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2020. Winn's fiscal year is the calendar year. (If no entry is required for ? transaction/event, $elect "N?Journal entry required" In the first account field. Round your answers to nearest whole dollers.) View transaction list Journal entry worksheet 7 Record the lease and interest payment for Winn. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2019 Interest expense 14,841 ase payable 67,488 Cash 72,000 Record entry Clear entry View general journalExplanation / Answer
Date Particulars L.F Amount ($) Amount ($) 2018 Jan-01 Prepaid Rent 156,000 Cash 156,000 (For advance payment done) Jan-01 Leasehold improvement 228,000 cash 228,000 (for structural modifications occurred) Dec-31 Rent Expense 72,000 cash 27,000 (For lease rental paid) Dec-31 Rent Expense (150,000/3) 50,000 Prepaid Rent 50,000 (For advance rent allocated) Dec-31 Depreciation 76,000 Accumulated dep-Leasehold Improvement 76,000 (For leasehold improvement amortized) 2019 Dec-31 Rent Expense 72,000 cash 72,000 (For lease rental paid) Dec-31 Rent Expense (150,000/3) 50,000 Prepaid Rent 50,000 (For advance rent allocated) Dec-31 Depreciation 76,000 Accumulated dep-Leasehold Improvement 76,000 (For leasehold improvement amortized) 2020 Dec-31 Rent Expense 72,000 cash 72,000 (For lease rental paid) Dec-31 Rent Expense (150,000/3) 50,000 Prepaid Rent 50,000 (For advance rent allocated) Dec-31 Depreciation 72,000 Accumulated dep-Leasehold Improvement 72,000 (For leasehold improvement amortized)