Essay
On January 1, 2018, Antonio's Pizzeria leased retail space from Berenstein Properties. The 8-year finance lease requires monthly variable lease payments equal to 3% of Antonio's Pizzeria's sales revenue, with a monthly sales minimum of $1,200,000. Payments at the beginning of each month are based on previous month sales. During the previous 5-year period, Antonio's Pizzeria has generated monthly sales of over $650,000. Berenstein's interest rate, known by Antonio's Pizzeria, was 5%.
Required:
Round your answers to the nearest whole dollar amounts.
1. Prepare the journal entries for Antonio's Pizzeria at the beginning of the lease.
2. Prepare the journal entries for Antonio's Pizzeria at February 1, 2018. January sales were $1,980,000. Amortization is recorded monthly.
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