Question

. E21-8 LO2,4) EXCEL (Lessor Entries: Sales-Type Lease) Crosley Company, a machinery Gall Dexter Corporation on January 1, 2017. The lase is for an 8-year period and t es quals beginning of each year. The first payment is received on January 1, 2017. Crosley had purchased the mained $160,000. Collectibility of lense payments by Crosley is probable. Crosley set the annual rental o r machine has an economic life of 10 years with no residual value and roverts to Crosley at the termination of the Instructions (a) Compute the amount of the lease receivable (b) Prepare all necessary journal entries for Crosley for 2017. (c) Suppose the collectibility of the lease payments was not probable for Crosley, Dope all necessary pumalonial the company in 2017. (d) Suppose at the end of the lease term, Crosley receives the set and determines that it actually have instead of the anticipated residual value of 50. Record the entry to recognize the receipt of the form end of the lease term.

Answer 1

Part-1) PV of lease: PV(rate, nper, pmt, [fv]), [type]) = -PV (6%,8,35004, , 1) = 230,410
Part-2)

Date    Particulars    Debit    Credit      
01-Jan-17   Lease Receivable    $230,410         
   Cost of Goods Sold    $160,000         
   Sales Revenue        $230,410     
   Inventory         $160,000     
                 
01-Jan-17   Cash    $35,004         
   Lease Receivable        $35,004     
                 
31-Dec-17   Lease Receivable    $11,724         
   Interest Revenue        $11,724     

Part-C)

Date    Particulars    Debit    Credit      
01-Jan-17   Cash    $35,004         
   Deposit Liability        $35,004     

Part-D)

Particulars    Debit    Credit      
Inventory    $1,000         
Gain on Lease         $1,000