Homework Answers
Solution 1:
Price at which builders is selling the equipment = Present value of lease payments
= $486,146 * Cumulative PV factor at 6% for 8 periods of annuity due
= $486,146 * 6.58238 = $3,199,998
Solution 2:
Amount related to lease builder inc report in balance sheet:
Lease receivables on 30.06.2021 = $3,199,998 - $486,146 = $2,713,852
Interest revenue on 31.12.2021 = $2,713,852 * 6% = $162,831
Lease payment on 31.12.2021 = $486,146
Lease receivables on 31.12.2021 = $2,713,852 + $162,831 - $486,146 = $2,390,537
Solution 3:
Amount to be reported in income statement:
Sales revenue = $3,199,998
Cost of goods sold = $2,700,000
Interest revenue = $162,831
Amount to be reported in income statement = $3,199,998 - $2,700,000 + $162,831 = $662,829
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