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Help On January 1, 2018, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 11% rate of
Help On January 1, 2018, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 11% rate of return for providing long-term financing. The lease agreement specified: a. Ten annual payments of $58,000 beginning January 1, 2018, the beginning of the lease and each December 31 thereofter through ning of the lease and each December 31 thereafter through b. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $336,658. c. The lease qualifies as a finance lease/sales-type lease A10 year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $6,500 per year are specified, beginning January 1, 2018. NRC int was to pay this cost as incurred, but lease payments reflect this expenditure. e. A partial amortization schedule, appropriate for both the lessee and lessor, follows: EV ot S1, eVot s1, EVA ot $1. PVA ot S1. EVAD of $1 and PVAD ot $) (Use appropriate factors) from the tables provided) Decrease in Outatanding Effective Interent (i Outatanding balance) ayments Balance Dalance 36, 658 285,158 265,025 242,678 51,500 1/1/2018 51,500 12/31/2018 51,5000-11 (285,158)31,36720,133 12/31/2019 51,5000.11 (265,025) 29,15322,347 Required: 1. Prepare the appropriate entries for the lessee related to the lease on January 1,2018 and December 31, 2018. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2018 and December 31, 2018. Complete this question by entering your answers in the tabs below
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