Joey Co. leased equipment to Legoria Co. on April 1, 2017. The first of eight equal annual payments of $175,000 (excluding executory costs) was made on April 1, 2017. The Cost of the equipment to Joey Co. is $940,000. The Cash selling price is $1,026,900. Assume year end is 12/31.

Requirements:

1). What is Joeys desired rate of return on this lease?***

2). What type of lease is this to Joey Co.?

3) Give the entry to record this lease on the books of Joey [4/1/17 to 4/1/2018] (Lease Amortization schedule should be prepared first)

4) How much income will Joey Co. recognize in 2017?