Question
Exercise 21A-8 a-d (Part Level Submission) Crane Company (lessor), a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is
Exercise 21A-8 a-d (Part Level Submission)
Crane Company (lessor), a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $32,359 at the beginning of each year. The first payment is received on January 1, 2017. Crane had purchased the machine during 2016 for $140,000. Collectibility of lease payments by Crane is probable. Crane set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Crane at the termination of the lease.
Suppose the collectibility of the lease payments was not probable for Crane (lessor). Prepare the necessary journal entry for the company in 2017
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