Answer:
PostCo.
a. Lease Amortization Schedule
Period PV PMT Interest FV
1/1/19 $1,022,400
12/31/19 $1,022,400 $210,000.00 $102,240 $914,640
12/31/20 $914,640 $210,000.00 $91,464 $796,104
b. Journal Entries:
January 1, 2019:
Debit Right of Use Asset $1,022,400
Credit Lease Liability $1,022,400
To record the right of use asset and the lease liability.
December 31, 2019:
Debit Interest on Lease $102,240
Credit Lease Liability $102,240
To record the interest expense for the year.
Debit Lease Liability $210,000
Credit Cash $210,000
To record the payment of lease liability and interest.
December 31, 2020:
Debit Interest on Lease $91,464
Credit Lease Liability $91,464
To record the interest expense for the year.
Debit Lease Liability $210,000
Credit Cash $210,000
To record the payment of lease liability and interest.
Step-by-step explanation:
a) Data and Calculations:
Annual lease payments = $210,000
Present value of the lease payments = $1,022,400
Interest rate = 10%
Lease period = 7 years
December 31, 2019:
Interest on lease = $102,240 ($1,022,400 * 10%)
Lease liability = $914,640 ($1,022,400 + $102,240 - $210,000)
December 31, 2020:
Interest on lease = $91,464 ($914,640 * 10%)
Lease liability = $796,104 ($914,640 + $91,464 - $210,000)