Business, 16.04.2020 01:01 alazhamason

On January 1, 2021, Rick’s Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease for three years. Rick’s had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $10,000 due on December 31 of each year, calculated by the lessor using a 5% interest rate. The agreement is considered an operating lease. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare Rick’s journal entry to record for the right-of-use asset and lease liability at January 1, 2021. 2. Prepare the journal entries to record interest and amortization at December 31, 2021.

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On January 1, 2021, Rick’s Pawn Shop leased a truck from Corey Motors for a six-year period with an...

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