Fold and Hold Corporation Entered into a Capital Lease for Equipment

question 74

Essay

Fold and Hold Corporation entered into a capital lease for equipment, which had a current cash equivalent cost of $38,971 on January 1, 2016. Fold and Hold paid cash of $10,000 on the date of entering into the lease, and promised to pay the balance in six equal annual installments on each December 31 beginning with December 31, 2016. The lease contained a 10% interest rate on the unpaid balance.
Required:
A.Prepare the journal entry to record the capital lease on January 1, 2016.
B.Prepare the entry to record the first installment payment on December 31, 2016 (round to the nearest dollar).Assume that no adjusting entries have been made during the year.

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Definitions:

Eco-Efficiency

An approach that seeks to create more goods and services while using fewer resources and producing less waste and pollution, aligning economic and environmental performance.

Natural Resources

Raw materials and resources that are found in the environment and are used for economic gain, such as minerals, forests, and water.

Performance Perspectives

Different angles or dimensions from which an organization's performance can be evaluated, such as financial, customer, internal processes, and learning and growth aspects.

Balanced Scorecard

A method for strategic management and planning that aligns organizational activities with its long-term vision and goals, strengthens internal and external communication, and monitors the organization's progress towards achieving its strategic objectives.