CraneCorporation, which uses ASPE, manufactures replicators. On May 29, 2020, it leased toSheffieldLimited a replicator that cost $265,800to manufacture and usually sells for $419,000. The lease agreement covers the replicator's6-year useful life and requiressixequal annual rentals of $78,167each, beginning May 29, 2020. The equipment reverts toCraneat the end of the lease, at which time it is expected that the replicator will have a residual value of $45,600, which is not guaranteed bySheffield, the lessee. An interest rate of8% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs.

Click here to view the factor table PRESENT VALUE OF 1.

Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.

PrepareCrane's May 29, 2020 journal 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. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

May 29

enter an account title to record inception of lease

enter a debit amount

enter a credit amount

enter an account title to record inception of lease

enter a debit amount

enter a credit amount

enter an account title to record inception of lease

enter a debit amount

enter a credit amount

enter an account title to record inception of lease

enter a debit amount

enter a credit amount

enter an account title to record inception of lease

enter a debit amount

enter a credit amount

(To record inception of lease.)

May 29

enter an account title to record the Collection of first lease payment

enter a debit amount

enter a credit amount

enter an account title to record the Collection of first lease payment

enter a debit amount

enter a credit amount

(Collection of first lease payment.