agreement.

Cullumber has the option to purchase the equipment for $$27,000$ upon termination of the lease. It is not reasonably certain that Cullumber will exercise this option.

The equipment has a cost of $$340,000$ and fair value of $$396,500$ to Marin Leasing. The useful economic life is $2$ years, with a residual value of $$27,000.$

Marin Leasing desires to earn a return of $5\%$ on its investment.

Collectibility of the payments by Marin Leasing is probable.

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$($a$)$

$($b$)$

Your answer is partially correct.

Assuming that Cullumber exercises its option to purchase the equipment on December $31,2026,$ prepare the journal entry to record the sale on Marin Leasing's books. $($List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts.$)$

$\backslash$table$[[$Date$,$Account Titles and Explanation,Debit,Credit$]]$