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Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians Leasing purchased a lithotripter from Rand for $1,900,000 and leased it to Mid-South Urologists Group, Inc., on January 1, 2018. (FV of S1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Lease Description: Quarterly lease payments Lease term No residual value; no purchase option Economic life of lithotripte:r Implicit interest rate and lessee's incremental borrowing $123,990-beginning of each period 5 years (20 quarters) 5 years 12% rate Fair value of asset $1,900,000 Required 1. How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing? 2. Prepare appropriate entries for both Mid-South Urologists Group and Physicians' Leasing from the beginning of the lease through the second rental payment on April 1, 2018. Adjusting entries are recorded at the end of each fiscal year (December 31) 3. Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced the machine at a cost of $1.6 million. Prepare appropriate entries for Rand Medical from the beginning of the lease through the second lease payment on April 1, 2018. Required 2 Lessee Required 2 Lessor Required 1 Required 3 Prepare appropriate entries for both Mid-South Urologists Group and Physicians' Leasing from the beginning of the through the second rental payment on April 1, 2018. Adjusting entries are recorded at the end of each fiscal year 31). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. En answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.) SI No Date General Journal Debit Credit January 01, 2018 Equipment 1,900,000 Lease payable 1,900,000 2 January 01, 2018 Lease payable 123,990 Cash 123,990 April 01, 2018 Interest expense Lease payable 53,280 70,710 Cash 123,990 K Required 1 Required 2 Lessor> Required 2 Lessee Required 2 Lessor Required 1 Required 3 Prepare appropriate entries for both Mid-South Urologists Group and Physicians' Leasing from the beginning of the lease through the second rental payment on April 1, 2018. Adjusting entries are recorded at the end of each fiscal year (December 31). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.) Show less Date General Journal Debit Credit January 01, 2018 Lease receivable 1,900,000 Equipment 1,900,000 2 January 01, 2018 Cash 123,990 Lease receivable 123,990 3 April 01, 2018 Cash 123,990 Lease revenue 53,280 Lease receivable 0,710 Required 2 Lessee Required 3 > Required 2 Required Lessor 2 Required 1 Required 3 Lessee Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produce machine at a cost of $1.6 million. Prepare appropriate entries for Rand Medical from the beginning of the lease through second lease payment on April 1, 2018. (If no entry is required for a transaction/event, select "No journal entry requir the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nea whole dollars.) Show No Date General Journal Debit Credit 1,900,000 January 01, 2018 Lease receivable Sales revenue 1,900,000 2 January 01, 2018 Cost of goods sold 1,600,000 Equipment Cash 1,600,000 123,990 Lease receivable 123,990 April 01, 2018 Cash 123,990 53,280 70,710 Interest revenue Lease receivable
