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Marin Corporation recorded a right-of-use asset for $214,400 as a result of a finance lease on December 31, 2019. Marin’s incremental borrowing rate is 11%, and the implicit rate of the lessor was not known at the commencement of the lease. Marin made the first lease payment of $37,534 on on December 31, 2019. The lease requires 8 annual payments. The equipment has a useful life of 8 years with no residual value.
Prepare Marin's December 31, 2017, entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places e.g. 5,275)
Date Account Titles and Explanation Debit Credit
December 31, 2017
December 31, 2017 (To record amortization of the right-of-use asset)

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Answer:

Date           Account titles and Explanation         Debit       Credit

31 Dec 19   Lease liability                                     $18,079

                  Interest expense                                $19,455

                  [(214,400-37,534)*11%]

                         Cash                                                              $37,534

                  (To record interest expense)

31 Dec 19   Amortization expense                        $26,800

                  [214,400/8]

                         Right of use asset                                         $26,800

                (To record amortization of the right of use asset)

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