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Record the cash receipt for the annual payments

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Question - Eastern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2021.

Other information: Lease term 5 years

Annual payments $70,000 on January 1 each year

Life of asset 5 years

Implicit interest rate 9%

PV, annuity due, 5 periods, 9% 4.2397

PV, ordinary annuity, 5 periods, 9% 3.8897

Hi-Tech's cost of the equipment $296,779

There is no expected residual value.

Please assist me in understanding how to formulate the appropriate journal entries for Hi-Tech Leasing for 2021 and 2022. Assuming a December 31 year-end.

Additionally, the questions requests that the intermediate and final answers be rounded to the nearest whole dollar amount.

Assistance with the journal entries would be much appreciated. Thank you.

Journal Entry (1): Record the lease.

Journal Entry (2): Record the cash receipt for the annual payments

Journal Entry (3): Record the entry for the interest revenue.

Journal Entry (4): Record the cash receipt for the annual payments.

Journal Entry (5): Record the entry for the interest revenue.

Reference no: EM132839083

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