On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computerworld at a cost of $90,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:
1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease.
2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease.
1 Record the beginning of the lease for Nath-Langstrom Services.
2 Record the lease payment and interest expense for Nath-Langstrom Services.
3 Record the amortization expense for Nath-Langstrom Services.
4 Record the lease payment and interest expense for Nath-Langstrom Services. .
5 Record the amortization expense for Nath-Langstrom Services. .
6 Record the lease revenue received by ComputerWorld Leasing.
7 Record the Depreciation expense for ComputerWorld Leasing. .
8 Record the lease revenue received by ComputerWorld Leasing.
9 Record the Depreciation expense for ComputerWorld Leasing.