USA Leases


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Jordan
Hi guys, can any one help with providing the correct answer for the below journal entries:
X leases equipment from A Corporation under a four-year lease agreement on 1/1/2011. The lease specifies annual payments of $36,000 on each 1/1 and beginning 1/1/2011. The annual lease payment includes a yearly $1,000 maintenance fee paid to A for providing relevant maintenance services on the equipment. X has the option to buy the equipment at the end of the lease term (i.e., 12/31/2014) for $20,000 when the fair value of the equipment is expected to be $60,000. The expected useful life of the equipment is five years with no residual value. The implicit rate is 10%.
DateAccount Name
Debit
Credit
1/1/2011ROU assets
[]​
Lease obligation
[]​
1/1/2011Lease obligation
[]​
Prepaid Maintenance
[]​
Cash
[]​
12/31/2011Maintenance expense
[ ]​
Prepaid Maintenance
[ ]​
12/31/2011Interest expense
[ ]​
Accrued interest
[ ]​
12/31/2011Depreciation expense
[ ]​
ROU assets
[ ]​
1/1/2012Lease obligation
[ ]​
Accrued interest
[ ]​
Prepaid Maintenance
[ ]​
Cash
[ ]​
12/31/2012Maintenance expense
[ ]​
Prepaid Maintenance
[ ]​
12/31/2012Interest expense
[ ]​
Accrued interest
[ ]​
12/31/2012Depreciation expense
[ ]​
ROU assets
]​
 
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Ian

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Please note that if you are looking for assistance with an exam-style question, you must attempt the question yourself before asking for help. You can then state the answer you have so far and explain which aspect you need help with. Anyone posting exam-style questions expecting the answer to be given to them will have their posts removed. Repeat offenders will be banned from the forum.
 
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Joined
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Jordan
I have tried and get the below answers noting that only answers underlined are correct:
DateAccount Name
Debit
Credit
1/1/20x1ROU assets
[108000]​
Lease obligation
[139000]​
1/1/20x1Lease obligation
[35000]​
Prepaid Maintenance
[1000]​
Cash
[36000]​
12/31/20x1Maintenance expense
[1000]​
Prepaid Maintenance
[1000]​
12/31/20x1Interest expense
[10400]​
Accrued interest
[10400]​
12/31/20x1Depreciation expense
[25600]​
ROU assets
[25600]​
1/1/20x2Lease obligation
[24600]​
Accrued interest
[10400]​
Prepaid Maintenance
[1000]​
Cash
[36000]​
12/31/20x2Maintenance expense
[1000]​
Prepaid Maintenance
[1000]​
12/31/20x2Interest expense
[10400]​
Accrued interest
[10400]​
12/31/20x2Depreciation expense
[25600]​
ROU assets
[25600]​
 
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