Bulls, Inc. leases a piece of equipment to Bucks Company on January 1, 2020. The contract stipulates a lease term of 5 years, with equal annual rental payments of $4,523 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 $30,000, a book value of $27,000, and a useful life of 8 years. At the end of the lease term, Bulls expects the residual value of the asset to be $12,000, and this amount is guaranteed by a third party. Bulls wants to earn a 4% return on the lease and collectibility of the lease payments is probable. Assume that the lease receivable is $30,000, deferred gross profit is $3,000, and the rate of return to amortize the net lease receivable to zero is 7.11%.

Prepare Bulls journal entry at the end of the first year of the lease to record the receipt of the first lease payment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round final answers to 0 decimal places, e.g. 5,275.)

Bulls, Inc. leases a piece of equipment to Bucks Company on January 1, 2020. The contract stipulates a lease term of 5 years, with equal annual rental payments of $4,523 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 $30,000, a book value of $27,000, and a useful life of 8 years. At the end of the lease term, Bulls expects the residual value of the asset to be $12,000, and this amount is guaranteed by a third party. Bulls wants to earn a 4% return on the lease and collectibility of the lease payments is probable. Assume that the lease receivable is $30,000, deferred gross profit is $3,000, and the rate of return to amortize the net lease receivable to zero is 7.11%. Prepare Bulls' journal entry at the end of the first year of the lease to record the receipt of the first lease payment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round final answers to O decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit