Exercise 21A-12 a-f

On January 1, 2017, Benson Company leased equipment to Flynn Corporation. The following information pertains to this lease:

1. The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $1,000, while the expected residual value at the end of the lease is $5,000.

2. Equal rental payments are due on January 1 of each year, beginning in 2017.

3. The fair value of the equipment on January 1, 2017, is $150,000, and its cost is $120,000.

4. The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight-line basis.

5. Bensen set the annual rental to ensure 5% rate of return. Flynns incremental borrowing rate is 6%, and the implicit rate of the lessor is unknown.

6. Collectibility of lease payments by the lessor is probable.

Both the lessor and lessees accounting periods end on December 31.

Could I get help with the calculations, please show work! Thanks.

Your answer is incorrect. Try again. Calculate the amount of the annual rental payment. ( $1-28102 Annual rental payment Your answer is partially correct. Try again. Prepare all the necessary journal entries for Bensen for 2017. (Credit account titles are automatio Date Account Titles and Explanation Debit Credit 1/1/17 Lease Receivable 150000 Cost of Goods Sold 116475 Sales Revenue 146475 120000 Inventory (To record the lease) Cash 28102 Lease Receivable 28102 (To record lease payment) 12/31/17 Lease Receivable 7314 Interest Revenue 7314 Suppose the collectibility of the lease payments was not probable for Bensen. Prepare the necessary journal entry for the company in 2017. (Ca indent manually.) Date Account Titles and Explanation Debit Credit 1/1/17 Cash 28102 Deposit Liability 28102 SHOW LIST OF ACCOUNTS Your answer is partially correct. Try again. Prepare all the necessary journal entries for Flynn for 2017. (Credit account titles are automatica Date Account Titles and Explanation Debit Credit 1/1/17 Right-of-Use Asset 146475 Lease Liability (To record the lease) Lease Liability 146475 28102 Cash 28102 (To record the receipt of lease payment) 12/31/17 Amortization Expense 18309 Right-of-Use Asset 18309 (To record amortization of the right-of-use asset) 7102 Interest Expense 7102 Lease Liability (To record interest expense) Your answer is partially correct. Try again. Prepare the effect on the journal entry for Flynn at lease commencement, assuming initial direct costs of $2,000 a amount is entered. Do not indent manually.) Account Titles and Explanation Right-of-Use Asset Debit Credit 148475 Cash 2000 Lease Liability 146475 SHOW LIST OF ACCOUNTS