Diablo Company leased a machine from Juniper Corporation on January 1, 2018. The

Question

Diablo Company leased a machine from Juniper Corporation on January 1, 2018. The machine has a fair value of $28,000,000 The lease agreement calls for five equal payments at the end of each year in the amount of $Z012·781 The useful life of the machine was expected to be five years with no residual value. The appropriate interest rate for this lease is 8% Required: 1 2 & 3. Prepare the appropriate journal entry (If no entry is required for a trensaction/event, select "No journal entry required" in the first occount field. Round your answers to the nearest whole dollar amounts.) View ransaction Iist Journal entry worksheet Record the entry for Diablo Company at the beginning of the lease Note: Eniter debits belore oredits Transaction General Jouermal Debit Credit Record entry Clear entry hew general journal

Explanation / Answer

Date Account Debit credit Jan 1 2018 Leased machinery 28,000,000 lease payable 28,000,000 [Machine taken on lease] 31 dec 2018 lease payable 4772781 Interest expense [28000000*.08] 2240000 cash 7012781 [first lease payment made] 31 dec 2019 Lease payable 5154603 Interest expense [(28000000-4772781)*.08] 1858178 cash 7012781 [SEcond lease payment made]

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