Dumont corporation a lessor of office machines purchased a new machine for 600000

PROBLEM III Dumont Corporation, a lessor of office machines purchased a new machine for S The following information relating to the lease transaction is available December 31,2002, which was delivered the same day to Finley Company, the lessee. The leased asset has an estimated useful life of six years The lease term is five years. At the end of the lease term, the machine will re have a residual value of $70,000 ( none of which is guaranteed by Finely) . Dumont's implicit interest rate is 1 1%, which is known by Finley Finley's incremental borrowing rate is 15% at December3 1,2002. .L ease rental consists of seven December 31,2002 Both lessor and lessee are calendar -year corporations and depreciate all fixed assets on the straight-line basis. equal annual payments , the first of which was paid on Information on the present value factors is as follows Present value of $1 for five periods at 15% Present value of $1 for five periods at 11%) Present value of an annuity due of 1 for five periods at(11% Present value of an annuity due of 1 for five periods at 15% . 0.497 0.593 . 3.854 Required: 1) Compute the annual rental under the lease. 57 2) Calculate the expense that the lessee recorded for the year ended December 31, 2003. 3) Prepare all the journal entries on the book of lessee for the years ending December 31, 2002 and December 31, 2003. 4) Determine Gross investment for the lessor. sheet