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Prepare the amortization schedules and journal entries

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Problem - Doris Smith recorded a capital lease at PV $350,640 on January 1, 2017. The interest rate is 11%. The leased asset has a life of 8 years. Smith made the first lease payment of $57,051 on 1/1/17. The lease requires 6 annual payments.

Required -

A. Why is this a capital lease?

B. Prepare the amortization schedule for the first 3 years for the lessee lessor?

C. Prepare lessee and lessor journal entries for the first three years?

D. Assume, additionally, that there is an unguaranteed residual of $12,000, PV-$10,000. Prepare the amortization schedules and journal entries for the lessee and lessor for the first 2 years.

Reference no: EM132462660

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