Use the information for Merrill Corporation from BE20–6. Assume
that a residual value of $17,000 is expected at the end of the lease, but that
Merrill does not guarantee the residual value. Prepare Merrill’s September 13,
2011 journal entries, assuming an interest rate of 9% and that Merrill also
uses private enterprise GAAP.
Leased Machinery........................ 136,910
Lease
Obligation.................... 136,910
Using tables:
PV of rentals $28,000
X 4.88965 $136,910
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Excel formula =PV(rate,nper,pmt,fv,type)
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Using a financial calculator:
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PV
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$
?
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Yields $136,910
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I
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9%
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N
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6
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PMT
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$( 28,000)
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FV
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0
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Type
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1
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Lease Obligation........................ 28,000
Cash............................... 28,000
