1. (LESSOR ENTRIES FOR FINANCING LEASE WITH A GUARANTEED RESIDUAL) The following facts pertain to a non-cancelable lease agreement between Ace Leasing Company and King Company, a lessee. Commencement of Lease Date Annual lease payment due at the beginning of the year beginning with January 1, 2020 Residual value of equipment at end of lease term, guaranteed by lessee Book Value of Lease Equipment on LESSOR books Lease term Economic life of leased equipment Fair Value of asset at January 1, 2020 Lessor's Implicit Rate Lessee's incremental borrowing rate The asset will revert to the lessor at the end of the lease term. January 1, 2020 $137,171 $54,000 $500,000 6 years 7 years $659,000 12% 12% You examined this lease from the Lessee prospective in the Lessee quiz for this chapter. the tests you found it was a financing lease. In this problem you will complete the LESSOR entries. You do not need to redo the tests - it is still a financing lease with a guaranteed residual. Based on A. Prepare the entry on the Lessor's book to record this Lease on 1/1/2020. You will need to compute the Lease Receivable debit, the CGS debit, the Equipment credit and the Sale Revenue credit to complete the entry.

1. (LESSOR ENTRIES FOR FINANCING LEASE WITH A GUARANTEED RESIDUAL) The following facts pertain to a non-cancelable lease agreement between Ace Leasing Company and King Company, o lessee. Yeo examined this lease from the Lessec prospective in the Lessee qeiz for this chapter, Basted an the tests you found it was a finascing lease. In this problem you will complete the I. SSSOR entries. You do aot need te redo the fests - it is utill a financiest lease with a guaranteed resifual. A. Prepare the entry on the Leswer's book to record this Lease os 1/1/2920. Yoo will necd to compute the Lease Receivable debit, the COS debit, the Equipmeat eredit and the Sale Hevenne credit to comiplete the eatry