On January 1, Teague Company Leased Office Equipment from Sprague

question 25

Essay

On January 1, Teague Company leased office equipment from Sprague Corporation. The lease qualifies as an operating lease. The term is three years and calls for semiannual payments of $25,000 each, payable on June 30 and December 31 of each year. Sprague acquired the machines at a cost of $150,000 on January 1 of the current year. The expected life is five years with no residual value expected. What journal entry should Montgomery make on January 1 of the current year?

---

Definitions:

Bumper Crops

Exceptionally large harvests of crops, usually resulting from favorable growing conditions.

Gross Incomes

The total income received before any deductions or taxes are subtracted.

Price Elasticity

An indicator of the degree to which the demand for a product is affected by fluctuations in its price, showing how sensitive buyers are to variations in cost.

Monet Paintings

Works of art created by Claude Monet, a founder of French Impressionist painting, characterized by their impression of the landscape or scenes, focusing on the effects of light and color.