Exercise 21A-10 a-d

The following facts pertain to a non-cancelable lease agreement between Cullumber Leasing Company and Marin Company, a lessee.

Commencement date		May 1, 2017
Annual lease payment due at the beginning of
each year, beginning with May 1, 2017		$19,656.69
Bargain purchase option price at end of lease term		$7,000
Lease term		5	years
Economic life of leased equipment		10	years
Lessors cost		$65,000
Fair value of asset at May 1, 2017		$93,000
Lessors implicit rate		6	%
Lessees incremental borrowing rate		6	%

The collectibility of the lease payments by Cullumber is probable.

Prepare a lease amortization schedule for Marin for the 5-year lease term.

Prepare the journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2017 and 2018. Marins annual accounting period ends on December 31. Reversing entries are used by Marin. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15.)