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Daycor, Inc., an equipment manufacturer, leased a machine to Commercial Kitchen Company on January 1, 2017. The lease is for a 5-year period and requires
Daycor, Inc., an equipment manufacturer, leased a machine to Commercial Kitchen Company on January 1, 2017. The lease is for a 5-year period and requires equal annual payments of $36,528.43 at the beginning of each year. The first payment is received on January 1, 2017. Daycor had built the machine during late 2016 and has been in its finished goods inventory at a cost of $140,000. Collectability of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Daycor. Daycor set the annual rental to ensure a 10% rate of return. The machine has an economic life of 8 years with no residual value and reverts back to Daycor at the termination of the lease. Required (a) Compute the amount of the lease receivable; round to the nearest whole dollar. (b) Prepare all necessary journal entries on Daycor's books for 2017 and 2018; again you can round to the nearest whole dollar
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