Ivanhoe Corporation, which uses ASPE, manufactures replicators. On May 29, 2020, it leased to Concord Limited a replicator that cost $266,800 to manufacture and usually sells for $421,000. The lease agreement covers the replicators 9-year useful life and requires 9 equal annual rentals of $68,051 each, beginning May 29, 2020. The equipment reverts to Ivanhoe at the end of the lease, at which time it is expected that the replicator will have a residual value of $41,300, which has been guaranteed by Concord, the lessee. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs.

Prepare Ivanhoes May 29, 2020 journal entries.

	a. To record inception of lease b. To record cost of goods sold c. Collection of first lease payment

Date Account Titles and Explanation Debit Credit May 29 (To record inception of lease.) May 29 (To record cost of goods sold.) May 29