Stockton Enterprises Signed a 4-Year Capital Lease for a Computer

Essay

Stockton Enterprises signed a 4-year capital lease for a computer on June 30,2010.The lease calls for $5,000 down,and four annual payments of $14,196 beginning on June 30,2011.Stockton has a June 30 year end and uses a 10% interest rate for all calculations relative to the lease.Prepare the necessary journal entries to record the signing of the lease on June 30,2010 and the first lease payment on June 30,2011.Show how the lease would appear on the June 30,2011 balance sheet of Stockton Enterprises.