Exercise 21A-6 a-b (Part Level Submission)

Tamarisk Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Carla Vista Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:

1.		Carla Vista has the option to purchase the equipment for $24,500 upon termination of the lease. It is not reasonably certain that Carla Vista will exercise this option.
2.		The equipment has a cost of $290,000 and fair value of $319,000 to Tamarisk Leasing. The useful economic life is 2 years, with a residual value of $24,500.
3.		Tamarisk Leasing desires to earn a return of 5% on its investment.
4.		Collectibility of the payments by Tamarisk Leasing is probable. Prepare the journal entries on the books of Tamarisk Leasing to reflect the payments received under the lease and to recognize income for the years 2017 and 2018. (