On July 1, 2006 Company A enters into a six-year, $190,000 lease of equipment that requires

$5.00

Description

On July 1, 2006 Company A enters into a six-year, $190,000 lease of equipment that requires five annual payments beginning July 1, 2006. The lease guarantees the lessor, Corporation B, a $30,000 residual value at lease end.
The assumed interest rate is 12%

12% tables present value PV Annuity Due
year 4 .63552 3.40183
year 5 .56743 4.03735
year 6 .50663 4.60478

Which journal entry shows the second lease payment on Company A’s books?
Choose 1 answer

a. Lease Liability 41,261.47
Cash 41,261.47
b. lease liability 37960.79
cash 37960.79
c. cash 37960.79
lease liability 37960.79
d. cash 41261.47
lease liability 41261.47

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