Jack Company leased an asset to Jill Company on January 1, 2015. Jill Company is

Question

Jack Company leased an asset to Jill Company on January 1, 2015. Jill Company is required to make $15,000 payments on January 1 of each year for six years, beginning January 1, 2015. The useful life of the asset is also estimated to be six years. If Jack Company determined the interest payment to provide it a 10 percent, return, Jack Company would make the following entry on January 1, 2015: Debit: Lease Receivable $71,862; Credit: Asset - $71,862 O Debit: Lease Receivable $90,000; Credit: Unearned Interest Income $18,138; Credit: Asset $71,862 Debit: Lease Receivable $90,000; Credit: Sales $90,000 ODebit: Lease Receivable $90,000; Credit: Asset - $90,000

Explanation / Answer

The correct option is option - B.

Lease Receivable $90,000 Dr.

Unearned Interest Income $18,138 Cr.

Asset $71,862 Cr.

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