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Cullumber Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal

Cullumber Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $30,840 at the beginning of each year. The first payment is received on January 1, 2020. Cullumber had purchased the machine during 2016 for $103,000. Collectibility of lease payments by Cullumber is probable. Cullumber set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Cullumber at the termination of the lease. Click here to view factor tables.

Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.)
Amount of the lease receivable $enter a dollar amount of the lease receivable rounded to 0 decimal places

Prepare all necessary journal entries for Cullumber for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

1/1/20

enter an account title to record the lease on January 1

enter a debit amount

enter a credit amount

enter an account title to record the lease on January 1

enter a debit amount

enter a credit amount

enter an account title to record the lease on January 1

enter a debit amount

enter a credit amount

enter an account title to record the lease on January 1

enter a debit amount

enter a credit amount

(To record the lease)

enter an account title to record the first lease payment on January 1

enter a debit amount

enter a credit amount

enter an account title to record the first lease payment on January 1

enter a debit amount

enter a credit amount

(To record the first lease payment)

12/31/20

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

Suppose the collectibility of the lease payments was not probable for Cullumber. Prepare the necessary journal entry for the company in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

1/1/20

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

Suppose at the end of the lease term, Cullumber receives the asset and determines that it actually has a fair value of $920 instead of the anticipated residual value of $0. Record the entry to recognize the receipt of the asset for Cullumber at the end of the lease term. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

1/1/20

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

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