Bush, inc. leases a knowledge machine from clinton leasing inc on December 31, 2008. The following data is available concerning the lease:
1) The term of the lease is 5 years with no renewal option or bargain purchase option.
2) The annual lease payments of $71,996.63 are due on December 31 of each year beginning with December 31, 2008. Included in the above amount are $3,000 of executory costs.
3) Bush's incremental borrowing rate is 15% and Clinton's is 10% which is know by the lessee.
4) The fair value of the equipment was 300,000. The useful life of the equipment is 6 years. The salvage value of the equipment is guaranteed and is 20,000. Equipment is depreciated under the straight line method.
Prepare an amortization table for the lessee in good form
Prepare all journal entries (for the lessee) for 2008, 2009 and 2013 to record the lease the lease payments and depreciation