On January 2, 2011, Gold Star Leasing Company leases equipment to Brick Co.with 5 equal annual payments of $40,000 each, payable beginning December 31, 2011.Brick Co.agrees to guarantee the $25,000 residual value of the asset at the end of the lease term.Brick's incremental borrowing rate is 10%, however it knows that Gold Star's implicit interest rate is 8%.What journal entry would Brick Co.make at December 31, 2011 to record the first lease payment?

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The Answer of On January 2, 2011, Gold Star Leasing Company leases equipment to Brick Co.with 5 equal annual payments of $40,000 each, payable beginning December 31, 2011.Brick Co.agrees to guarantee the $25,000 residual value of the asset at the end of the lease term.Brick's incremental borrowing rate is 10%, however it knows that Gold Star's implicit interest rate is 8%.What journal entry would Brick Co.make at December 31, 2011 to record the first lease payment?

On January 2, 2011, Gold Star Leasing Company Leases Equipment