Cullumber Corporation, which uses ASPE, manufactures replicators. On May 29, 2020, it leased to Waterway Limited a replicator that cost $267,200 to manufacture and usually sells for $415,000. The lease agreement covers the replicators 9-year useful life and requires 9 equal annual rentals of $64,870 each, beginning May 29, 2020. The equipment reverts to Cullumber at the end of the lease, at which time it is expected that the replicator will have a residual value of $41,700, which has been guaranteed by Waterway, the lessee. An interest rate of 11% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs.

Prepare Cullumbers 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
	(To record inception of lease.)
May 29
	(To record cost of goods sold.)
May 29