Question
2). XYZZ Company leased equipment from RRR Company on July 1, year x1, for an eight-year period expiring June 30, year x9. Equal annual payments
2). XYZZ Company leased equipment from RRR Company on July 1, year x1, for an eight-year period expiring June 30, year x9. Equal annual payments under the lease are $200,000 and are due on July 1 of each year. The first payment was made on July 1, x1. The rate of interest contemplated by Trump and Reagan is 8%. The cash selling price of the equipment is $1,241,250 and the cost of the equipment on Reagan's accounting records was $1,100,000. Assuming that the lease is appropriately recorded as sales-type by Reagan, what is the amount of gross profit on the sale and the interest income that Reagan would record for the year ended December 31, x1? No tables are needed. Select one: a. $0 and $0. b. $141,250 and $49,650. c. $141,250 and $41,650. d. $0 and $41,650.
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