Use the Following Information for Questions

question 51

Multiple Choice

Use the following information for questions
On January 1, 2015, Sauder Corporation signed a five-year noncancelable lease for equipment.The terms of the lease called for Sauder to make annual payments of $50,000 at the beginning of each year for five years with title to pass to Sauder at the end of this period.The equipment has an estimated useful life of 7 years and no residual value.Sauder uses the straight-line method of depreciation for all of its fixed assets.Sauder accordingly accounts for this lease transaction as a finance lease.The minimum lease payments were determined to have a present value of $208,493 at an effective interest rate of 10%.
-In 2016, Sauder should record interest expense of

• A)$10,849.
• B)$12,434.
• C)$15,849.
• D)$17,434.

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Definitions:

Trade Balance

The difference between a country's exports and imports, indicating whether a country has a surplus or deficit in trade with foreign partners.

Imports

Goods or services brought into one country from another for sale or use.

Exports

The sale of goods and services produced in one country to residents of other countries.

Domestic Saving

The part of a nation's income that is not spent on consumption or government expenditure, and is instead saved or invested domestically.