Shamrock Corporation recorded a right-of-use asset for $187,600 as a result of a finance lease on December 31, 2019. Shamrock's incremental borrowing rate is 12%, and the implicit rate of the lessor was not known at the commencement of the lease. Shamrock made the first lease payment of $36,702 on December 31, 2019. The lease requires 7 annual payments. The equipment has a useful life of 7 years with no residual value. Prepare Shamrock's December 31, 2020, entries.

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Business

Korbin Tanner

25 August, 00:23

Shamrock Corporation recorded a right-of-use asset for $187,600 as a result of a finance lease on December 31, 2019. Shamrock's incremental borrowing rate is 12%, and the implicit rate of the lessor was not known at the commencement of the lease. Shamrock made the first lease payment of $36,702 on December 31, 2019. The lease requires 7 annual payments. The equipment has a useful life of 7 years with no residual value. Prepare Shamrock's December 31, 2020, entries.

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Garrett Nichols · Answer 1

A Journal was prepared for Shamrock for December 31 2020 data entries.

It shown below in the explanation section

Explanation:

Solution

Shamrock 's December 31, 2020, Journal entries:

Date Account Titles & Explanation Debit Credit

Dec 31, 20 Lease liability 18594

Interest expense

(187600-36702) * 12% 18108

Cash 36702

(To record interest expense)

Dec 31,20 Amortization expense (187600/7) 26800

Right of use asset 26800

(To record amortization of the right-of-use asset)