What would the journal entry show

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Company A has a capital lease where they owe $35,000 on a $50,000 asset. The company pays one annual payment on the lease of $5,000 per year. The interest rate is 3% per year (for ease of the calculation, it is simple interest). In year four, what would be the journal entry for the capital lease? Company B has an operating lease for which they owe $10,000 on a $20,000 asset. They also pay one annual payment of $2,000 per year plus 3% simple interest. In year 6, what would the journal entry show?

Reference no: EM13663069

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