Larkspur Leasing Company signs a lease agreement on January $1,2025,$ to lease electronic equipment to Crane Company. The term of the non$-$cancelable lease is $2$ years, and payments are required at the end of each year. The following information relates to this agreement.

Crane has the option to purchase the equipment for $$27,000$ upon termination of the lease. It is not reasonably certain that Crane will exercise this option.

The equipment has a cost of $$330,000$ and fair value of $$368,000$ to Larkspur Leasing. The useful economic life is $2$ years, with a residual value of $$27,000.$

Larkspur Leasing desires to earn a return of $6\%$ on its investment.

Collectibility of the payments by Larkspur Leasing is probable.

$($b$)$

X Your answer is incorrect.

Assuming that Crane exercises its option to purchase the equipment on December $31,2026,$ prepare the journal entry to record the sale on Larkspur Leasing's books. $($List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter O for the amounts.$)$Larkspur Leasing Company signs a lease agreement on January $1,2025,$ to lease electronic equipment to Crane Company. The term of the non$-$cancelable lease is $2$ years, and payments are required at the end of each year. The following information relates to this agreement.

Crane has the option to purchase the equipment for $$27,000$ upon termination of the lease. It is not reasonably certain that Crane will exercise this option.

The equipment has a cost of $$330,000$ and fair value of $$368,000$ to Larkspur Leasing. The useful economic life is $2$ years, with a residual value of $$27,000.$

Larkspur Leasing desires to earn a return of $6\%$ on its investment.

Collectibility of the payments by Larkspur Leasing is probable.

$($b$)$

X Your answer is incorrect.

Assuming that Crane exercises its option to purchase the equipment on December $31,2026,$ prepare the journal entry to record the sale on Larkspur Leasing's books. $($List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter O for the amounts.$)$