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1. Amount of lease receivables
= 38,514 x PVOAD (11%, 8 years)
= 38,514 x 5.712
= $219,991.968
2. (a) Lease receivable Dr. 219,991.968
COGS Dr. 186,000
To sales revenue 219,991.968
To inventory 186,000
(b) Cash Dr. 38,514
To Lease receivable 38,514
(c) Interest receivable Dr. 19,962.54
To interest revenue 19,962.54
[219,991.968 - 38,514] x 11%
Exercise 21-6 Kingbird Company, a machinery dealer, leased a machine to Dexter Corporation on January 1,...
Larkspur Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $32,912 at the beginning of each year. The first payment is received on January 1, 2017. Larkspur had purchased the machine during 2016 for $152,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Larkspur. Larkspur set the annual rental...
Exercise 21-6 Cullumber Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $35,713 at the beginning of each year. The first payment is received on January 1, 2017. Cullumber had purchased the machine during 2016 for $161,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Cullumber. Cullumber set the...
Crane 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 $29,017 at the beginning of each year. The first payment is received on January 1, 2020. Crane had purchased the machine during 2016 for $119,000. Collectibility of lease payments by Crane is probable. Crane set the annual rental to ensure a 6% rate of return. The machine has an economic life of...
Carla Vista 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 $30,080 at the beginning of each year. The first payment is received on January 1, 2020. Carla Vista had purchased the machine during 2016 for $116,000. Collectibility of lease payments by Carla Vista is probable. Carla Vista set the annual rental to ensure a 6% rate of return. The machine has...
Novak Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $33,610 at the beginning of each year. The first payment is received on January 1, 2017. Novak had purchased the machine during 2016 for $146,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Novak. Novak set the annual rental...
Larkspur Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $32,912 at the beginning of each year. The first payment is received on January 1, 2017. Larkspur had purchased the machine during 2016 for $152,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Larkspur. Larkspur set the annual rental...
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...
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