Warren Corporation signs an agreement on January 2,2017,to lease delivery equipment for a five-year period.The current market value of the delivery equipment on January 2,2017,is $225,000.The lease agreement calls for annual payments of $50,040.The first payment is made on January 2,2017,all other payments are made on December 31 of each year.The lease agreement calls for an 8% interest rate.The estimated remaining life of the delivery equipment is six years.Ownership of the delivery equipment will transfer to Warren Corporation at the end of the lease term.
a_Prepare the journal entry on January 2,2017,to record the lease agreement and make the first lease payment.
b_Prepare the entry on December 31,2017,to record the second lease payment and the accrual of interest.

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The Answer of Warren Corporation signs an agreement on January 2,2017,to lease delivery equipment for a five-year period.The current market value of the delivery equipment on January 2,2017,is $225,000.The lease agreement calls for annual payments of $50,040.The first payment is made on January 2,2017,all other payments are made on December 31 of each year.The lease agreement calls for an 8% interest rate.The estimated remaining life of the delivery equipment is six years.Ownership of the delivery equipment will transfer to Warren Corporation at the end of the lease term.
a_Prepare the journal entry on January 2,2017,to record the lease agreement and make the first lease payment.
b_Prepare the entry on December 31,2017,to record the second lease payment and the accrual of interest.

Warren Corporation Signs an Agreement on January 2,2017,to Lease Delivery