On July 1,2011,Janus Company Leased Equipment to Pluto Company Pluto Uses Straight-Line Depreciation for Its Property,plant,and Equipment,and Its Year-End

question 66

Essay

On July 1,2011,Janus Company leased equipment to Pluto Company. The terms of the lease are as follows:
$\begin{array}{|l|l|}\hline\text { Fair value of leased asset } & 60,000 \\\hline \text { Lease payments, due at end of lease term } & \\\text { starting June 30, 2012 } & 12,000 \\\hline \text { Lease term } & 9 \text { years } \\\hline \text { Economic life of leased asset } & 10 \text { years } \\\hline \text { Guaranteed residual value } & 6,000 \\\hline \text { Lessee's incremental borrowing rate } & 15 \% \\\hline\end{array}$ Pluto uses straight-line depreciation for its property,plant,and equipment,and its year-end is December 31.
Requirement:
Prepare the journal entries for the lease from July 1 through December 31.

---

Definitions:

Molality

A metric indicating the amount of solute per unit weight of solvent, calculated in moles of solute per kilogram of solvent.

Molarity

The quantification of how much solute is present in a solution, represented by moles of solute per liter of solution.

Infrared Region

A portion of the electromagnetic spectrum with wavelengths longer than visible light and shorter than microwaves, typically used in heating and imaging technologies.

Ultraviolet Region

A portion of the electromagnetic spectrum with wavelengths shorter than visible light but longer than X-rays, often utilized in health, forensics, and sterilization practices.