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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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  1. 25 August, 03:02
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    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)
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