Diamond Company, a machinery dealer, leased a machine to Turtle Corporation on January $1,2025.$ The lease is for an $8-$year period and requires equal annual payments of $$63,807$ at the beginning of each year. The first payment is received on January $1,2025.$ Diamond had purchased the machine during $2024$ for $$376,000.$ Collectibility of lease payments by Diamond is probable. Diamond set the annual rental to ensure $6\%$ rate of return. The machine has an economic life of $9$ years with no residual value and reverts to Diamond at the termination of the lease.

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$($a$)$

Your answer is incorrect.

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 es$.5\mathrm{.}275.)$

Amount of the lease receivable

Prepare all necessary journal entries for Diamond for $2025.($List all debit entries before credit entries. Credit account titles are automatically indented when 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 answers to $0$ decimal places e g$.5,275.)$

Date

Account Titles and Explanation

Debit

Credit

$($To record the lease$)$

$($To record receipt of the first lease payment$)$

$($c$)$

Suppose the collectibility of the lease payments was not probable for Diamond. Prepare all necessary journal entries for the company in $2025.($List all debit entry before credit entry. Credit account titles are automatically indented when 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 answers to $0$ decimal places eg$.5,275.)$

Date Account Titles and Explanation

Debit

Credit

$\frac{1}{1}\frac{?}{25}$

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Suppose at the end of the lease term, Diamond receives the asset and determines that it actually has a fair value of $$5,000$ instead of the anticipated residual value of $$0.$ Record the entry to recognize the receipt of the asset for Diamond at the end of the lease term. $($List all debit entry before credit entry. Credit account titles are automatically indented when 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.$)$

Date Account Titles and Explanation

Debit

Credit

$1/1/25$