Berne Company (lessor) enters into a lease with Fox Company to lease equipment to Fox beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of $50,000 to be made at the end of each year. 2. The equipment costs $130,000. The equipment has an estimated life of 4 years and an estimated residual value at the end of the lease term of zero. 3. Fox agrees to pay all executory costs directly to a third party. 4. The interest rate implicit in the lease is 12%. 5. The initial direct costs are insignificant and assumed to be zero. 6. The collectability of the rentals is reasonably assured. Required: 1. Next Level Assuming that the lease is a sales-type lease from Berne's point of view, calculate the selling price and assume that this is also the fair value. 2. Prepare a table summanizing the lease receipts and interest income eamed by Beme. 3. Prepare joumal entries for Beme, the lessor, for the years 2019 and 2020. Chart of Accounts CHART OF ACCOUNTS Berne Company General Ledger ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts Receivable 433 Interest Income 122 Lease Receivable 123 Equipment Leased to Others EXPENSES 141 Inventory 500 Cost of Goods Sold 152 Prepaid Insurance 511 Insurance Expense 181 Equipment 512 Utilities Expense 189 Accumulated Depreciation 521 Salaries Expense 532 Bad Debt Expense LIABILITIES 540 Interest Expense 211 Accounts Payable 541 Depreciation Expense 231 Salaries Payable 559 Miscellaneous Expenses 250 Unearned Interest 910 Income Tax Expense 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings Next Level Assuming that the lease is a sales-type lease from Beme's point of view, calculate the selling price and assume that this is also the fair value. Additional instruction 5 2. Prepare a fable summarizing the lease recejpts and inferest income eamed by Beme. General Journal 3a. Prepare joumal entries for Beme, the lessor, for the year 2019. 36. Prepare joumal entries for Beme, the lessor, for the year 2020 . Berne Company (lessor) enters into a lease with Fox Company to lease equipment to Fox beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of $50,000 to be made at the end of each year. 2. The equipment costs $130,000. The equipment has an estimated life of 4 years and an estimated residual value at the end of the lease term of zero. 3. Fox agrees to pay all executory costs directly to a third party. 4. The interest rate implicit in the lease is 12%. 5. The initial direct costs are insignificant and assumed to be zero. 6. The collectability of the rentals is reasonably assured. Required: 1. Next Level Assuming that the lease is a sales-type lease from Berne's point of view, calculate the selling price and assume that this is also the fair value. 2. Prepare a table summanizing the lease receipts and interest income eamed by Beme. 3. Prepare joumal entries for Beme, the lessor, for the years 2019 and 2020. Chart of Accounts CHART OF ACCOUNTS Berne Company General Ledger ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts Receivable 433 Interest Income 122 Lease Receivable 123 Equipment Leased to Others EXPENSES 141 Inventory 500 Cost of Goods Sold 152 Prepaid Insurance 511 Insurance Expense 181 Equipment 512 Utilities Expense 189 Accumulated Depreciation 521 Salaries Expense 532 Bad Debt Expense LIABILITIES 540 Interest Expense 211 Accounts Payable 541 Depreciation Expense 231 Salaries Payable 559 Miscellaneous Expenses 250 Unearned Interest 910 Income Tax Expense 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings Next Level Assuming that the lease is a sales-type lease from Beme's point of view, calculate the selling price and assume that this is also the fair value. Additional instruction 5 2. Prepare a fable summarizing the lease recejpts and inferest income eamed by Beme. General Journal 3a. Prepare joumal entries for Beme, the lessor, for the year 2019. 36. Prepare joumal entries for Beme, the lessor, for the year 2020