On January 1, 2018, Dave's Transport leased a car from Alfonso Motors for a six-year period with an option to extend the lease for three years. Dave's had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $5,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. The agreement is considered an operating lease.
Required:
Round your answers to the nearest whole dollar amounts.
1. Prepare Dave's journal entry to record for the right-of-use asset and lease liability at January 1, 2018.
2. Prepare the journal entries to record interest and amortization at December 31, 2018.

Question

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The Answer of On January 1, 2018, Dave's Transport leased a car from Alfonso Motors for a six-year period with an option to extend the lease for three years. Dave's had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $5,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. The agreement is considered an operating lease.
Required:
Round your answers to the nearest whole dollar amounts.
1. Prepare Dave's journal entry to record for the right-of-use asset and lease liability at January 1, 2018.
2. Prepare the journal entries to record interest and amortization at December 31, 2018.

On January 1, 2018, Dave's Transport Leased a Car from Alfonso