Hatfield Corporation leases a tractor from Star Leasing with a five-year non-cancelable lease on January 1, 2014 under the following terms:
1. Five payments of $26,379.74 (a 9% implicit rate) due at the end each year.
2. The fair value of the tractor is $100,000.
3. The lease is nonrenewable and the tractor reverts to Star at the end of the lease term.
4. The tractor has a six-year economic life.
5. Hatfield has an excellent credit rating.
6. Star offers no warranty on the tractor other than the manufacturer's two-year warranty that is handled directly with the manufacturer.
-With which one of the following entries will Hatfield prepare to record the payment on December 31,2014?
D) $\begin{array}{lll} \text { DR Interest expense } & 26,379.74 \ \text { CR Cash } & & 26,379.74 \end{array}$

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The Answer of Hatfield Corporation leases a tractor from Star Leasing with a five-year non-cancelable lease on January 1, 2014 under the following terms:
1. Five payments of $26,379.74 (a 9% implicit rate) due at the end each year.
2. The fair value of the tractor is $100,000.
3. The lease is nonrenewable and the tractor reverts to Star at the end of the lease term.
4. The tractor has a six-year economic life.
5. Hatfield has an excellent credit rating.
6. Star offers no warranty on the tractor other than the manufacturer's two-year warranty that is handled directly with the manufacturer.
-With which one of the following entries will Hatfield prepare to record the payment on December 31,2014?
D) $\begin{array}{lll} \text { DR Interest expense } & 26,379.74 \ \text { CR Cash } & & 26,379.74 \end{array}$

Hatfield Corporation Leases a Tractor from Star Leasing with a Five-Year