Rumsfeld Corporation leased a machine on December 31, 2021, for a three-year period. The lease agreement calls for annual payments in the amount of $14,500 on December 31 of each year beginning on December 31, 2021. Rumsfeld has the option to purchase the machine on December 31, 2024, for $16,500 when its fair value is expected to be $26,500. The machine's estimated useful life is expected to be five years with no residual value. The appropriate interest rate for this lease is 12%. n, i PV of $1 PV, ordinary annuity PV, annuity due 1 period, 12% 0.89286 0.89286 1.00000 2 periods, 12% 0.79719 1.69005 1.89286 3 periods, 12% 0.71178 2.40183 2.69005
Required:
1. Calculate the amount to be recorded as a right-of-use asset and the associated lease payable.
2. Prepare Rumsfeld's journal entries for this lease for 2021 and 2022. Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare Rumsfeld's journal entries for this lease for 2021 and 2022. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to the nearest whole dollar amounts.) View transaction list Journal entry worksheet 1 2 3 4 Record the lease.