Question

Blossom Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $28,865 at the beginning of each year. The first payment is received on January 1, 2020. Blossom had purchased the machine during 2016 for $100,000. Collectibility of lease payments by Blossom is probable. Blossom set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Blossom at the termination of the lease. Click here to view factor tables. ✓ Your answer is correct. Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.) Amount of the lease receivable $ 190000

Answer 1

Answer- b) Journal euhies tor Bsom for 2020. leredit particulars LF Debit Date 2020 Lease receivables e Jan-l cost o goods Sold $190000 100,000 or To Sales Revenue $190,000 $100000 To Cash Being to secord the Lea ci cash ac $28.865 $28865 To Leace Reccivable Being to secord fivst Leau payment] Dec-s Lease Receivable Ale $9668 Dr TO Interest Revenm [C$ 190,000-$28865)» 6 ] 899b4 c) The Leace payment Journal enty was uot probable tor Blowon. Date 2020 Cash Jan-l parteulorg LF Debit $28,865 CrediF Dr Ale To Deporit Liabilily $28865 d) Eud f he Lear term, Blossom seceiues the asse Qud debruiw that it gatrally has, a fair valun 6 900. Justead of Hhe auticipated re sidual value $ $0. Datel 202 8 dea zuveulory afe particulars H Debit $900 credit or $900 Gain on Lease CResideualbalaues)