E18-16 (Sales with Repurchase) Cramer Corp. sells idle machinery to Enyart Company on July 1,

2014, for $40,000. Cramer agrees to repurchase this equipment from Enyart on June 30, 2015, for a price

of $42,400 (an imputed interest rate of 6%).

Instructions

(a) Prepare the journal entry for Cramer for the transfer of the asset to Enyart on July 1, 2014.

(b) Prepare any other necessary journal entries for Cramer in 2014.

(c) Prepare the journal entry for Cramer when the machinery is repurchased on June 30, 2015.