You have signed an agreement to lease a car for four years, Accounting Basics

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You have signed an agreement to lease a car for four years

You have signed an agreement to lease a car for four years and will make annual payments of $4,000 at the end of each year. (Assume that the lease meets the criteria for a capital lease.)

Required

1. Calculate the present value of the lease payments assuming an 8% interest rate.

2. Record the journal entry for the signing of the lease.

3. When the first lease payment is made, what portion of the payment will be considered interest?

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Accounting Basics: You have signed an agreement to lease a car for four years

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Accounting Basics: You have signed an agreement to lease a car for four years

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