Question

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 to ensure an 11% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Larkspur at the termination of the lease. Click here to view factor tables Compute the amount of the lease receivable. (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.) The amount of the lease receivable $enter the amount of the lease receivable rounded to 0 decimal places

wp Chapter 21 HW Assignment X + € → e learn.wileyplus.com/courses/27940/assignments/2650788 = Fall. Asi Chapter 21 HW Assignment Chapter 21 HW Assignment List of Accounts Prepare all necessary journal entries for Larkspur for 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Endry" for the account titles and enter for the amounts. Round answers to decimal places eg: 56.971.) Account Titles and Explanation Debit Credit Date 1/10/17 (To record the case.) (To record the first lease payment.) 12/31/17 clextbook and Media List of Accounts

Answer 1

Answers * compeate the amourrt do the leasc receivables Amount o lease receivables = $32,912 x l- = $32,912 x 1-(1+11%) C1+1.7.) = $32,912 x 5.712196265 = $187999.80 - The amount of lease receivibles = $187999,80 * Prepare all necessary Tournd Entives for Larkspur, fors 7- Credit $18.999.80 $152.000 Date Account Titles and cxplanations Debit 440 Lease Receivable $187999.80 cost of Goods sold $152,000 sales Revenue - inventory Cash $32,912 Lease Receivable 31/12/17. interest Receivable $15059266 interest Revenue => interest receivable -(187949,80 – 3a91a)x11% = 17059.66 $32,912 $15059.66