Question

Assume that IBM leased equipment that was camried at a cost of $150,000 to Blossom Company. The term of the lease is 5 years December 31, 2019, with equal rental payments of $30,044 beginning December 31, 2019. The fairvalue of the equipment at commencement of the lease is $129,554. The equipment has a useful lide of 5 years with no salvage value. The lease has an implicit interest rate of 8% no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Prepare IBM's December 31, 2019,journal entries at commencement of the lease. (Credit account titles are automatically Indented when amount is entered. Do not indent monually For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 declmal places eg. 5,275) Click here to view factor tables Credit Debit Account Titles and Explanation Date 150000 Lease Recelvable December 31, 2019 150000 Equipment (To record the lease) 30044 Cash December 31, 2019 30044 Lease Receivable (To record receipt of lease payment)

Answer 1

Date	Particulars	Debit	Credit
31-Dec-19	Lease Receivable	$       129,554.00
	Cost of goods sold	$       150,000.00
	Sales		$      129,554.00
	Equipment		$      150,000.00
	(To record lease)
31-Dec-19	Cash	$         30,044.00
	Lease Receivable		$        30,044.00
	(To record receipt of lease payment)

Answer 2

Correct aside from the software wanting the account title as Inventory instead of Equipment.