All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback. PAGE 1 GENERAL JOURNAL Score: 32/88 DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 Jan. 1 Equipment Leased to Others 2 Cash 3 Lease Receivable 4 Unearned Interest 5 Cash 6 Lease Receivable 7 Points: 6.18 / 17 Garvey Company (the lessee) entered into an equipment lease with Richie Company (the lessor) on January 1 of Year 1. 1. The equipment reverts back to the lessor at the end of the lease, and there is no bargain purchase option. The equipment is not specialized for Garvey. 2. The lease term is 5 years and requires Garvey to make annual payments of $65,949.37 at the end of each year. 3. The discount rate is 10%, which is implicit in the lease. Garvey knows this rate. 4. The fair value of the equipment at the lease inception is $250,000. The present value of an ordinary annuity of five payments of $65,949.37 each at 10% is $250,000. 5. The equipment has an estimated economic life of 7 years and has zero residual value at the end of this time. Straight- line depreciation is used for similar assets. Required: Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of $200,000. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of $200,000. General Journal Instructions All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback. PAGE 1 GENERAL JOURNAL Score: 32/88 DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 Jan. 1 Equipment Leased to Others 2 Cash 3 Lease Receivable 4 Unearned Interest 5 Cash