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Prepare the journal entry for american food services

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Reference no: EM132600824

Question - American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $5.2 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be six years with no residual value. Barton and Barton's implicit interest rate was 12%.

Required -

1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021.

2. Make amortization schedule for the four-year term of the lease.

3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023.

1) Record the beginning of the lease for American Food Services.

2) Make amortization schedule for the four-year term of the lease.

3) Record the lease payment and interest expense for the American food services.

4) Record the amortization of right-of-use asset for American Food Services.

5) Record the lease payment and interest expense for American Food Services

6) Record the amortization of right-of-use asset for American Food Services.

Reference no: EM132600824

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