Presented below are two independent situations.
| 1. |
| Sunny
Isles Car Rental leased a car to Emmaus Company for one year. Terms of
the operating lease agreement call for monthly payments of $500. |
| 2. |
| On
January 1, 2012, Wruck Inc. entered into an agreement to lease 20
computers from Braskich Electronics. The terms of the lease agreement
require three annual rental payments of $30,000 (including 10% interest)
beginning December 31, 2012. The present value of the three rental
payments is $74,606. Wruck considers this a capital lease. |
| (a) |
| Prepare the appropriate journal entry to be made by Emmaus Company for the first lease payment. |
| (b) |
| Prepare the journal entry to record the lease agreement on the books of Wruck Inc. on January 1, 2012. |
