Answer to Question #185621 in Accounting for Milan

Question

Debit ROU Asset

Credit Lease Liability

• What does this journal entry mean?

Debit Interest Expense

Debit Lease Liability

Credit Cash/Lease Payable 

• What does this journal entry mean?

Debit Amortization Expense

Credit Accumulated Amortization – ROU asset

• What does this journal entry mean?

Debit Lease Receivable

Credit Fixed Asset

Credit Gain

• What does this journal entry mean?

Debit Lease Receivable

Debit Residual Asset

Credit Fixed Asset 

• What does this journal entry mean?

Debit Cash (lease payment)

Credit Interest Income

Credit Lease Receivable 

• What does this journal entry mean?

Debit Cash

Credit Rental Income

• What does this journal entry mean?

Thank you.

Answer 1

The lessee uses an asset over the contracted term of a lease.

The firm has offer an asset with an interest.

The firm has leased a fixed asset and has not paid for the lease of the asset.

The firm has leased a fixed asset and has paid for the lease of the asset.

Interest income and lease receivable have been paid to the business, acting as income.

The firm has received some rental income, hence cash has Increased.