On January 2, 2015, Gold Star Leasing Company leases equipment to Brick Co.with 5 equal annual payments of $80,000 each, payable beginning January 2, 2015.Brick Co.agrees to guarantee the $50,000 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 January 1, 2016 to record the second lease payment?

Question

Quizplus · Accepted Answer

The Answer of On January 2, 2015, Gold Star Leasing Company leases equipment to Brick Co.with 5 equal annual payments of $80,000 each, payable beginning January 2, 2015.Brick Co.agrees to guarantee the $50,000 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 January 1, 2016 to record the second lease payment?

On January 2, 2015, Gold Star Leasing Company Leases Equipment