On January 1, Year 1, Manlier Inc. leased equipment costing $45,000 to one of it
ID: 2515480 • Letter: O
Question
On January 1, Year 1, Manlier Inc. leased equipment costing $45,000 to one of its customers. The sales-type lease agreement specifies six annual payments of $15,000 beginning on that date. The present value of the annual lease payments is $73,619. At the end of the lease, the equipment will be returned to Manlier and is expected to have a residual value of $5,000. The present value of that residual value is $2,822. Complete the appropriate journal entry recorded by Manlier at the beginning of the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole number.)
Record the entry at the beginning of the lease.
Explanation / Answer
Journal Entry in the books Of Lesser S. No. Particular Debit Credit 1 Lease Receivable ($15000*6+$5000) $95,000 Sales Revenue ($73619+$2822) $78,619 Unearned Interest Revenue $16,381 TO Record Lease Receivabel 2 Cost of Goods Sold $45,000 Merchandised inventory $45,000 To Record Cost of Equipment