Kingbird Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years. The normal selling price of the machine is $538,465, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $14,700. The hospital will pay rents of $65,300 at the beginning of each year. Kingbird incurred costs of $268,000 in manufacturing the machine and $15,100 in legal fees directly related to the signing of the lease. Kingbird has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%.

Discuss the nature of this lease in relation to the lessor. The nature of this lease in relation to the lessor is

operating leasefinance leasesales-type lease

. Compute the amount of each of the following items. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 0 decimal places, e.g. 5,275.)

(1)		Lease receivable at commencement of the lease		$
(2)		Sales price		$
(3)		Cost of sales		$

b. Prepare a 10 year lease amortization schedule for Amirante, the lessor

c. Prepare all of the lessors entries for the first year