Question

E21-8 (L02,4) EXCEL (Lessor Entries; Sales-Type Lease) Crosley 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 $35,004 at the beginning of each year. The first payment is received on January 1, 2017. Crasley had purchased the machine during 2016 for 160,000. Collectiblity of lease payments by Crosley is probable. Crosley set the annual rental to ensure a 6"a rate of return. The machine has an economic life of 10 years with no residual value and nuverts to Crosley at the termination of the lease Instructions a) Compute the amount of the lease receivable. (b) Prepare all necussary journal entries for Crosley for 2017 lc) Suppose the collectibility of the lease payments was not probable for Crosley Prepare all necessary journal entries for the company in 2017 (d) Suppose at the end of the lease term, Crosley receives thesset and delermines that it actually has a fair value of S1,000 inslead of the anticipaled residual value of S0. Record the entry to recognize the receipt of the asset for Crosley at the end of the lease term

Answer 1

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Explanation

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