On January 1, 2017, Salvatore Inc. leased several machines from Robert, LLP unde
ID: 2412684 • Letter: O
Question
On January 1, 2017, Salvatore Inc. leased several machines from Robert, LLP under a 1 year operating lease agreement. The lease calls for semiannual payments of $15,000 each, payable on June 30 and December 31 of each year. The machines were acquired by Robert at a cost of $90,000 and are expected to have a useful life of five years with no expected residual value. Prepare the appropriate journal entries for the lessee from the inception of the lease through the end of 2017.
**Does it matter if I use Rent Expense or Lease Expense account?** Thank you!
Explanation / Answer
Solution:
It does not matter if use rent expense or lease expense account. Name of account doesn't matter only nature of account matters.
Journal Entries - Salvatore Inc. Date Particulars Debit Credit 30-Jun-17 Rent Expense Dr $15,000.00 To Cash $15,000.00 (To record semiannual payment of rent on leased machine) 31-Dec-17 Rent Expense Dr $15,000.00 To Cash $15,000.00 (To record semiannual payment of rent on leased machine)