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Prepare the journal entry for american food services

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Reference no: EM132837184

American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2018. The lease agreement for the $5.7 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 five years with no residual value. Barton and Barton's implicit interest rate was 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

Problem 1: Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2018.

Problem 2: Prepare the amortization schedule for the four-year term of the lease.

Problem 3: Prepare the appropriate entries related to the lease on December 31, 2018 and 2020.

Reference no: EM132837184

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