21.

Blossom Corp. is a manufacturer of truck trailers. On January 1, 2021, Blossom Corp. leases 11 trailers to Splish Company under a 5-year noncancelable lease agreement. The following information about the lease and the trailers is provided:

1.

Equal annual payments that are due on January 1 each year provide Blossom Corp. with an 15% return on net investment.

2.

Titles to the trailers pass to Splish at the end of the lease.

3.

The fair value of each trailer is $52,300. The cost of each trailer to Blossom Corp. is $45,700. Each trailer has an expected useful life of nine years.

4.

Collectibility of the lease payments is probable.

Click here to view factor tables.

What type of lease is this for the lessor? Direct-financing type leaseSales-type lease

Calculate the annual lease payment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.)

Annual lease payment

$

Prepare a lease amortization schedule for Blossom Corp. for the first three years. (Round answers to 0 decimal places e.g. 5,275.)

Blossom Corp. Lease Amortization Schedule (Lessor)
Date		Annual Lease Rental		Interest on Lease Receivable		Lease Receivable Recovery		Lease Receivable
1/1/21								$
1/1/21		$		$		$
1/1/22
1/1/23

Prepare the journal entries for the lessor for 2021 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
January 1, 2021December 31, 2021
	(To record the lease)
January 1, 2021December 31, 2021
	(To record receipt of the first lease payments)
January 1, 2021December 31, 2021

Click if you would like to Show Work for this question:

Open Show Work