Leased a delivery truck to YA right after purchasing it for $40,000 on December 31, 2021. Its retail value is $45,114. The lease agreement specifies annual payments of $11,000, including $1,000 maitenance fee, beginning December 31, and at each December 31 through 2024. The interest rate for determining payments was 10%. At the end of the four year lease term (December 31, 2025), the truck was expected to be worth $15,000. The useful life of the truck is five years with no salvage value. The company uses straight line method. In addition, the guaranteed residual value was $6,000. What is the journal entry/entries?

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Explanation:

Date                Account                                       Debit           Credit

Dec 2021lease receivable                         44,000.00  

unearned maintenance fee                                                  4,000.00

asset (delivery truck)                                                            40,000.00

dec 2022cash/bank                                     11,000.00  

unearned maintenance fee                                                 1,000.00

lease receivable                                                                 10,000.00

depreciation expense                                   7,822.80  

accumulated depreciation                                                 7,822.80

dec 2023cash/bank                                   11,000.00  

unearned maintenance fee                                                 1,000.00

lease receivable                                                                10,000.00

depreciation expense                                7,822.80  

accumulated depreciation                                                7,822.80

dec 2024cash/bank                                 11,000.00  

unearned maintenance fee                                               1,000.00

lease receivable                                                               10,000.00

depreciation expense                                7,822.80  

accumulated depreciation                                               7,822.80

dec 2025cash/bank                               11,000.00  

unearned maintenance fee                                               1,000.00

lease receivable                                                              10,000.00

depreciation expense                              7,822.80  

accumulated depreciation                                              7,822.80

dec 2025asset                                           13,822.80  

gain on lease                                                                     13,822.80

in terms of experimental research, mcdonald’s charging different prices in the two cities relates to