Bird Leasing, Inc. leased equipment to George Corporation, on jan 1, 2013. The terms of the lease are as follows. THe lase requires four equal payments of $175,000, with the first payment made at the signing of the lease on Jan 1, 2013, and the other three made at the end of every year, beginning December 31, 2013. The economic lfie of the equipment is 4 years , and the interest rate implicit in the lease is 12%. The equipment has a cost and fair value to Bird Leasing of $595,315 at the inception of the lease. THe lease qualifies as a capital lease for both companies and is a direct fnancing lease for Bird Leasing. Assume no residual or salvage value for the equipment at the end of the lease term. George Corporation uses straight line depreciation.
a.) Prepare a lease amortization schedule for George Corporation (adjust interest in the last row so balance in the lease liability goes to zero when last payment made!)
b.) Prepare journal entries that George would make on Jan 1 2013
c.) Prepare the journal entries that George would make on Dec 31 2013
d.) Prepare a lease amortization schedule for Bird leasing.
e.) Prepare the journal entries that Bird Leasing would make on Jan 1 2013
f.) Prepare the journal entry or entries that Bird Leasing would make on Dec 31 2013