The Journal Entry Recorded by the Lessee When the Payment

question 3

Multiple Choice

The journal entry recorded by the lessee when the payment is made at the end of the first year is:

• A)Dr Interest expense 4 225 Dr Lease liability 18 775
• Cr Cash 23 000
• B)Dr Lease liability 4 225 Dr Interest expense 18 775
• Cr Cash 23 000
• C)Dr Interest expense 1 610 Dr Lease liability 21 390
• Cr Cash 23 000
• D)Dr Lease liability 1 610 Dr Interest expense 21 390
• Cr Cash 23 000

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Definitions:

Transact Business

Transact Business refers to the conduct of commercial, professional, or other routine operations between parties.

Piercing the Corporate Veil

A legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders, essentially ignoring the corporation's separate legal personality.

Sole Stockholder

A single individual or entity that owns 100% of the shares of a corporation.

Corporate Entity

A corporate entity is a company or group that is authorized to act as a single entity and recognized as such in law, separate from its shareholders.