Create appropriate journal entries for high time tours

Assignment Help Accounting Basics

Reference no: EM132476028

High Time Tours leased rock-climbing equipment from Adventures Leasing on January 1, 2018. High Time has the option to renew the lease at the end of two years for an additional three years for $9,400 per quarter. Adventures purchased the equipment at a cost of $219,364.

Related Information:

Lease term = 2 years (8 quarterly periods)
Quarterly lease payments $16,400 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter.
Lease renewal option for an additional 3 years at $9,400 per quarter
Economic life of asset= 5 years
Interest rate charged by the lessor = 10%

Required:

Question 1: Show how to calculate the present value of the asset.

Question 2: Show appropriate journal entries for High Time Tours from the beginning of the lease through March 31, 2018. Appropriate adjusting entries are made quarterly.

Question 3: Show an amortization schedule for the term of the lease.

Reference no: EM132476028

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