On January 1, 2021, Rick’s Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease f
or three years. Rick’s had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $10,000 due on December 31 of each year, calculated by the lessor using a 5% interest rate. The agreement is considered an operating lease. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare Rick’s journal entry to record for the right-of-use asset and lease liability at January 1, 2021. 2. Prepare the journal entries to record interest and amortization at December 31, 2021.
1 answer:
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Answer:
The price elasticity of demand for Twinkies in the given price range is 0.641.
Explanation:
The price of Twinkies is reduced from $1.45 to $1.25.
The quantity of Twinkies demanded increases from 2,000 to 2,200.
Price elasticity of demand for Twinkies
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= 0.641