Current Attempt in Progress
Ayayai Corporation enters into a 5-year lease of equipment on December 31, 2019, which requires 5 annual payments of
$43,200 each, beginning December 31, 2019. In addition, Ayayai guarantees the lessor a residual value of $18,000 at the end of the
lease. However, Ayayai believes it is probable that the expected residual value at the end of the lease term will be $9,000. The
equipment has a useful life of 5 years.
Prepare Ayayais' December 31, 2019, journal entries assuming the implicit rate of the lease is 9% and this is known to Ayayai. (Credit
account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as
displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.)
Click here to view factor tables.
Date
Account Titles and Explanation
Debit
Credit
December
Right-of-Use Asset
31, 2019
Lease Liability
(To record the lease liability)
December
Lease Liability
31, 2019
Cash
(To record lease payment)
