Carla Vista Incorporated leases a piece of machinery to Flint Company on January 1, 2020, under the following terms. 1. 2. 3. The lease is to be for 4 years with rental payments of $10,256 to be made at the beginning of each year. The machinery' has a fair value of $54,994, a book value of $41,040, and an economic life of 10 years. At the end of the lease term, both parties expect the machinery to have a residual value of $20,520. To protect against a large loss, Carla Vista requests Flint to guarantee $14,140 of the residual value, which Irving agrees to do. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. The implicit rate is 5%, which is known by Flint. Collectibility of the payments is probable. 4. 5. 6. Prepare the journal entries for Flint for the year 2020. (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 O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To records first lease payment) Dec. 31 (To record accrued interest) Dec. 31 (To record amortization expense) e Textbook and Media Carla Vista Incorporated leases a piece of machinery to Flint Company on January 1, 2020, under the following terms. 1. 2. 3. The lease is to be for 4 years with rental payments of $10,256 to be made at the beginning of each year. The machinery' has a fair value of $54,994, a book value of $41,040, and an economic life of 10 years. At the end of the lease term, both parties expect the machinery to have a residual value of $20,520. To protect against a large loss, Carla Vista requests Flint to guarantee $14,140 of the residual value, which Irving agrees to do. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. The implicit rate is 5%, which is known by Flint. Collectibility of the payments is probable. 4. 5. 6. Prepare the journal entries for Flint for the year 2020. (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 O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To records first lease payment) Dec. 31 (To record accrued interest) Dec. 31 (To record amortization expense) e Textbook and Media