Flint Company leased equipment to Land Company for a five-year period. Flint paid $46,965 for the equipment, its current carrying value (estimated useful life five years). The lease started on January 1, 2020. Flint uses a target rate of return of 8% in all lease contracts. The first payment was on January 1, 2020, and the accounting periods end on December 31. The equipment reverts to the lessor at the end of the lease term at which time the lessor estimates that the equipment will have an unguaranteed residual value of $2,000.

Required

a. Compute the annual payment for the lessor.

• Note: Round answer to the nearest dollar.
• Note: Do not use a negative sign with your answer.

Answer

b. Prepare an amortization schedule of the lease receivable for the lessor.

• Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule.
• Note: Include any net rounding difference to Lease Receivable in the Interest Revenue amount for Jan. 1, 2025.

Date	Lease Payment	Interest Revenue	Reduction of Lease Receivable	Lease Receivable
Jan. 1, 2020				Answer
Jan. 1, 2020	Answer	Answer	Answer	Answer
Jan. 1, 2021	Answer	Answer	Answer	Answer
Jan. 1, 2022	Answer	Answer	Answer	Answer
Jan. 1, 2023	Answer	Answer	Answer	Answer
Jan. 1, 2024	Answer	Answer	Answer	Answer
Jan. 1, 2025	Answer	Answer	Answer	Answer
Total	Answer	Answer	Answer

c. Provide journal entries for 2020 and 2021 for the lessor assuming that the equipment is held in the lessors Inventory account.

Note: Round your answers to the nearest whole dollar.

Date	Account Name	Dr.	Cr.
Jan. 1, 2020		Answer	Answer
		Answer	Answer
	To record lease receivable
Jan. 1, 2020		Answer	Answer
		Answer	Answer
	To record lease payment
Dec. 31, 2020		Answer	Answer
		Answer	Answer
	To record interest
Jan. 1, 2021		Answer	Answer
		Answer	Answer
	To record lease payment
Dec. 31, 2021		Answer	Answer
		Answer	Answer
	To record interest

d. Record the entry on January 1, 2025, for the return of the equipment assuming the equipment had a fair value of $2,000.

Date	Account Name	Dr.	Cr.
Jan. 1, 2025		Answer	Answer
		Answer	Answer