Question

Question 27

Blue Corporation manufactures replicators. On January 1, 2017, it leased to Althaus Company a replicator that had cost $102,700 to manufacture. The lease agreement covers the 5-year useful life of the replicator and requires 5 equal annual rentals of $41,900 payable each January 1, beginning January 1, 2017. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs.

Prepare Blue’s January 1, 2017, journal entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

Click here to view factor tables

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Date	Account	Debit	Credit
Jan 1	Lease Receivable	$ 102,700
	Sales		$ 102,700
	(To record lease receivable)
Jan 1	Cost of goods sold	$ 169,165
	Inventory		$ 169,165
	(To record cost of goods sold) $41,900*4.03735
Jan 1	Cash	$    41,900
	Lease Receivable		$    41,900
	(To record lease received)