Residual value $ 20,000 Date
PV of single sum (i=10%, n=4) 0.68301 1/1/07
PV of residual value $ 13,660 1/1/07
12/31/07
Cost of equipment to be recovered $ 80,000 12/31/08
PV of residual value $ 13,660 12/31/09
Amount to be recovered through lease payment $ 66,340 12/31/10
PV of annuity due (i=10%, n=4) 3.48685
Annual payment required $ 19,026
Lease Payment Interest Expense Recovery of Receivable Lease Receivable
$ 80,000
$ 19,026 $ 19,026 $ 60,974
$ 19,026 $ 6,097 $ 12,928 $ 48,046
$ 19,026 $ 4,805 $ 14,221 $ 33,825
$ 19,026 $ 3,382 $ 15,643 $ 18,182
$ 20,000 $ 1,818 $ 18,182 0
Journal Entry 2007
1/1/07 Lease Receivable $ 80,000
Equipment $ 80,000
Cash $ 19,026
Lease Receivable $ 19,026
12/31/07 Interest Receivable $ 6,097
Interest Revenue $ 6,097
Journal Entry 2008
1/1/08 Cash $ 19,026
Lease Receivable $ 12,928
Interest Receivable $ 6,097
12/31/08 Interest Receivable $ 4,805
Interest Revenue $ 4,805
Journal Entry 2009
1/1/09 Cash $ 19,026
Lease Receivable $ 14,221
Interest Receivable $ 4,805
12/31/09 Interest Receivable $ 3,382
Interest Revenue $ 3,382
Journal Entry 2010
1/1/10 Cash $ 19,026
Lease Receivable $ 15,643
Interest Receivable $ 3,382
12/31/10 Interest Receivable $ 1,818
Interest Revenue $ 1,818
Journal Entry 2011
1/1/11 Cash $ 20,000
Lease Receivable $ 18,182
Interest Receivable $ 1,818
Total $ 192,206 $ 192,206
Payment $ 19,026 Date Lease Payment
PV of annuity due (i=10%, n=4) 3.48685 1/1/07
PV of minimum lease payments $ 66,340 1/1/07 $ 19,026
12/31/07 $ 19,026
Residual value $ 20,000 12/31/08 $ 19,026
PV of single sum (i=10%, n=4) 0.68301 12/31/09 $ 19,026
PV of residual value $ 13,660 12/31/10 $ 20,000
Total Present Value $ 80,000
Residual Value $ 20,000
$ 60,000
Lease Term 4 Years
Depreciation $ 15,000
Interest Expense Reduction of Liability Lease Liability Journal Entry 2007
$ 80,000 1/1/07
$ 19,026 $ 60,974
$ 6,097 $ 12,928 $ 48,046
$ 4,805 $ 14,221 $ 33,825
$ 3,382 $ 15,643 $ 18,182
$ 1,818 $ 18,182 0
12/31/07
Journal Entry 2008
1/1/08
12/31/08
Journal Entry 2009
1/1/09
12/31/09
Journal Entry 2010
1/1/10
12/31/10
Journal Entry 2011
1/1/11
Total
al Entry 2007
Lease Computer $ 80,000
Lease Liability $ 80,000
Lease Liability $ 19,026
Cash $ 19,026
Interest Expense $ 6,097
Interest Payable $ 6,097
Depreciation Expense $ 15,000
Accumulated Depreciation $ 15,000
al Entry 2008
Interest Payable $ 6,097
Lease Liability $ 12,928
Cash $ 19,026
Interest Expense $ 4,805
Interest Payable $ 4,805
Depreciation Expense $ 15,000
Accumulated Depreciation $ 15,000
al Entry 2009
Interest Payable $ 4,805
Lease Liability $ 14,221
Cash $ 19,026
Interest Expense $ 3,382
Interest Payable $ 3,382
Depreciation Expense $ 15,000
Accumulated Depreciation $ 15,000
al Entry 2010
Interest Payable $ 3,382
Lease Liability $ 15,643
Cash $ 19,026
Interest Expense $ 1,818
Interest Payable $ 1,818
Depreciation Expense $ 15,000
Accumulated Depreciation $ 15,000
al Entry 2011
Interest Payable $ 1,818
Lease Liability $ 18,182
Cash $ 20,000
Total $ 252,206 $ 252,206
