On January 1, 2017, Crane Company leased equipment to Flynn Corporation The following information pertains to this lease 1 The term of the non cancelable lease is 6 years At the end of the lease term, Flynn has the option to purchase the equipment for $2,000, while the expected residual value at the end of the lease is $7,000 2 Equal rental payments are due on January 1 of each year, beginning in 2017 3 The fair value of the equipment on January 1, 2017, is $130,000, and its cost is $100,000 4 The equipment has an economic life of 8 years Flynn depreciates all of its equipment on a straight line basis 5 Crane set the annual rental to ensure a 5 rate of return Flynns incremental borrowing rate is 6 , and the implicit rate of the lessor is unknown 6 Collectibility of lease payments by the lessor is probable Both the lessor and the lessees accounting periods end on December 31 Prepare all the necessary journal entries for Crane for 2017 (Credit account titles are automatically indented when the amount is entered Do not indent manually Round answers to o decimal places, e g 5,275 ) Date Account Titles and Explanation Debit Credit 1 1 17 TLease Receivable 130002 Cost of Goods Sold 100000 Sales Revenue 130002 100000 To record the lease)

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On January 1, 2017, Crane Company leased equipment to Flynn Corporation. The following information pertains to this lease: 1. The term of the non-cancelable lease

On January 1, 2017, Crane Company leased equipment to Flynn Corporation. The following information pertains to this lease:

1.		The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $2,000, while the expected residual value at the end of the lease is $7,000.
2.		Equal rental payments are due on January 1 of each year, beginning in 2017.
3.		The fair value of the equipment on January 1, 2017, is $130,000, and its cost is $100,000.
4.		The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight-line basis.
5.		Crane set the annual rental to ensure a 5% rate of return. Flynns incremental borrowing rate is 6%, and the implicit rate of the lessor is unknown.
6.		Collectibility of lease payments by the lessor is probable.

Both the lessor and the lessees accounting periods end on December 31.

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Prepare all the necessary journal entries for Crane for 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to o decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/17 TLease Receivable 130002 Cost of Goods Sold 100000 Sales Revenue 130002 100000 To record the lease)