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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
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. $ 10,260 x Amortization Schedule Journal Entries c. Provide journal entries for 2020 and 2021 for the lessor assuming that the equipment is held in the lessor's Inventory account. Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Cr. Jan. 1, 2020 Lease Receivable 46,965 0 Inventory 0 46,965 To record lease receivable Jan 1, 2020 Cash 9,393 x 0 Lease Receivable 0 9,393 x To record lease payment Dec 31, 2020 Lease Expense X 0X 0 Lease Receivable 0 0 X To record interest Jan. 1, 2021 Interest Revenue X OX 0 0 Lease Liability 0 To record lease payment Dec 31, 2021 Lease Receivable 0X 0 Cash 0 0X 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 Inventory 2,000 0 Lease Receivable 0 2,000
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