Exercise 21-6 to Dexter Corporation on January 1, 2017. The lease is for an 8-ye

Question

Exercise 21-6 to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $32,737 at the beginning of each year. The first payment is received on January 1, 2017. Marigold had purchased the ma chine during 2016 for $146,000. the amount of costs yet to be incurred by Marigold. Marigold set the Collectibility of lease payments is reasonably predictable, and no important uncertaintes surrou annual rental to ensure an 11% rate of return. The machine lease. has an economic life of 10 years with no residual value and reverts to Marigold at the termination of the value and reverts to Marigold at the termination of the lculations to 5 decimal places, e.g. 1.25124 and the final answer to Compute the amount of the lease recervable. (Round present value factor cu places e.g. 58,971.) 0 decimal The amount of the lease receivable

Explanation / Answer

a) Amount of the Lease Receivable = $32737 * 5.71219 = $187000

b) Journal Entries :-

Date Particulars Debit ($) Credit ($) Jan 1 Lease Receivable 187000 Cost of Goods Sold 146000 To Inventory 146000 To Sales 187000 Jan 1 Cash 32737 To Lease Receivable 32737 Dec 31 Interest Receivable($32737 * 11%) 3601 To Interest Revenue 3601

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.