Blossom, Inc. leases a piece of equipment to Wildhorse Company on January $1,2025.$ The contract stipulates a lease term of $5$ years,

with equal annual rental payments of $$8,880$ at the end of each year. Ownership does not transfer at the end of the lease term, there is

no bargain purchase option, and the asset is not of a specialized nature. The asset has a fair value of $$48,000,$ a book value of $$43,000,$

and a useful life of $8$ years. At the end of the lease term, Blossom expects the residual value of the asset to be $$12,000,$ and this amount

is guaranteed by a third party.

Assuming Blossom wants to earn a $5\%$ return on the lease and collectibility of the lease payments is probable, record its journal entry

at the commencement of the lease on January $1,2025.($List all debit entries before credit entries. Credit account titles are automatically

indented when the 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. For calculation purposes, use $5$ decimal places as displayed in the factor table provided and round final answers to $0$ decimal places,

e$.$g$.5,275.)$

Click here to view factor tables.

Account Titles and Explanation

Debit

Credit

Leased Asset