USA Leases

[Yamenalshalabe]

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%.

Date	Account Name		Debit​	Credit
1/1/2011	ROU assets		[]​
		Lease obligation	[]​
1/1/2011	Lease obligation		[]​
	Prepaid Maintenance	[]​
		Cash		[]​
12/31/2011	Maintenance expense	[ ]​
		Prepaid Maintenance	[ ]​
12/31/2011	Interest expense		[ ]​
		Accrued interest	[ ]​
12/31/2011	Depreciation expense	[ ]​
		ROU assets		[ ]​
1/1/2012	Lease obligation		[ ]​
	Accrued interest		[ ]​
	Prepaid Maintenance	[ ]​
		Cash		[ ]​
12/31/2012	Maintenance expense	[ ]​
		Prepaid Maintenance	[ ]​
12/31/2012	Interest expense		[ ]​
		Accrued interest	[ ]​
12/31/2012	Depreciation expense	[ ]​
		ROU assets		]​

 

[Ian]

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.

 

[Yamenalshalabe]

I have tried and get the below answers noting that only answers underlined are correct:

Date	Account Name		Debit​	Credit
1/1/20x1	ROU assets		[108000]​
		Lease obligation	[139000]​
1/1/20x1	Lease obligation		[35000]​
	Prepaid Maintenance	[1000]​
		Cash		[36000]​
12/31/20x1	Maintenance expense	[1000]​
		Prepaid Maintenance	[1000]​
12/31/20x1	Interest expense		[10400]​
		Accrued interest	[10400]​
12/31/20x1	Depreciation expense	[25600]​
		ROU assets		[25600]​
1/1/20x2	Lease obligation		[24600]​
	Accrued interest		[10400]​
	Prepaid Maintenance	[1000]​
		Cash		[36000]​
12/31/20x2	Maintenance expense	[1000]​
		Prepaid Maintenance	[1000]​
12/31/20x2	Interest expense		[10400]​
		Accrued interest	[10400]​
12/31/20x2	Depreciation expense	[25600]​
		ROU assets		[25600]​