Question

Recording Sales-Type Lease, Unguaranteed Residual Value-Lessor Flint Company leased equipment to Land Company for a five-year period. Flint paid $46,965 for the equipment, its current carrying value (estimated useful life five years). The lease started on January 1, 2020. Flint uses a target rate of return of 8% in all lease contracts. The first payment was on January 1, 2020, and the accounting periods end on December 31. The equipment reverts to the lessor at the end of the lease term at which time the lessor estimates that the equipment will have an unguaranteed residual value of $2,000. Required a. Compute the annual payment for the lessor. - Note: Round answer to the nearest dollar. - Note: Do not use a negative sign with your answer. $ 0x Amortization Schedule Journal Entries b. Prepare an amortization schedule of the lease receivable for the lessor. - Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Note: Include any net rounding difference to Lease Receivable in the Interest Revenue amount for Jan. 1, 2025. Lease Interest Reduction of Lease

Answer 1

(a)	Annual payment for the lessor			$10,891
	($46,965/4.3121)
(b)	Date	Lease Payment	Interest Revenue	Reduction of Lease Receivable	Lease Receivable
	Jan 1, 2020				$46,965
	Jan 1, 2020	$10,891	$0	$10,891	$36,074
	Jan 1, 2021	$10,891	$2,886	$8,005	$28,069
	Jan 1, 2022	$10,891	$2,246	$8,645	$19,423
	Jan 1, 2023	$10,891	$1,554	$9,337	$10,086
	Jan 1, 2024	$10,891	$807	$10,084	$2
	Jan 1, 2025	$2.00	$0.18	$1.82	$0
	Total	$54,457	$7,492	$46,965