Gambet Labs Entered into a Lease Agreement on January 1,20X3,to $\begin{array} { c c c } \text { Machine Leasehold } & 50,553 & \\\text { Eapital Lease Liability } & & 50,553 \\\end{array}$

question 165

Multiple Choice

Gambet Labs entered into a lease agreement on January 1,20X3,to use an x-ray machine.The machine has a useful life of 6 years.Gambet Labs will make annual lease payments of $13,000 for 6 years,beginning on December 31,20X3.Assume a 14% interest rate.Using the present value tables,what journal entry will Gambet Labs make on January 1,20X3?

• A)\(\begin{array} { c c c }
• \text { Machine Leasehold } & 50,553 & \\
• \text { Eapital Lease Liability } & & 50,553 \\
• \end{array}\)
• B)\(\begin{array}{lccc}
• \text { Machine Leasehold } & 7,000 & \\
• \text { Capital Lease Liability } & & 78,000 \\
• \end{array}\)
• C)\(\begin{array}{lccc}
• \text { Machine Leasehold } & 50,553 & \\
• \text { Deferred Interest Expense } & 27,447 & \\
• \text { Capital Lease Obligation } & & 78,008 \\
• \end{array}\)
• D)\(\begin{array}{lccc}
• \text { Machine Leasehold } & 7,000 & \\
• \text { Interest Iayzble } & & 27,447 \\
• \text { Capital Lease Liability } & & 50,553
• \end{array}\)
• E)No journal entry is necessary.

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