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Exercise 21-11 The following facts pertain to a non-cancelable lease agreement between Larkspur Leasing Company and Crane Company, a lessee. May 1, 2020 Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate $17,865.02 $7,000 5 years 10 years $65,000 $85,000 6 % 6 % The collectibility of the lease payments by Larkspur is probable. Click here to view factor tables. Your answer is correct. Prepare a lease amortization schedule for Larkspur for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) LARKSPUR LEASING COMPANY (Lessor) Lease Amortization Schedule Interest on Lease Recovery of Lease Receivable Receivable Annual Lease Payment Plus BPO Date 5/1/20 Lease Receivable 85000 17865.02 17865.02 67134.98 5/1/20 5/1/21 4028.10 13836.92 53298.06 17865.02 17865.02 5/1/22 3197.88 14667.14 38630.92 5/1/23 17865.02 2317.86 15547.16 23083.76 5/1/24 17865.02 1385.03 16479.99 6603.77 4/30/25 7000 396.23 6603.77 96,325.10 11,325.10 85000 Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2020 and 2021. The lessor's accounting period ends on December 31. Reversing entries are not used by Larkspur. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 5/1/20 e Receivable 85000 Tcost of Goods Sold 65000 65000 Sales Revenue 85000 Inventory 65000 (To record the lease) 5/1/20 = Cash 17865.02) 17865.02 Lease Receivable 17865.02 (To record lease payment) 12/31/20 Interest Receivable 2685.40 Interest Revenue 2685.40 T5/1/21 yeash 17865.02 TVNUT T Lease Receivable 13836.92 ( Interest Receivable 4028.10 712/31/21 3 Inter 12/31/21- Interest Receivable 2131.92 Interest Revenue 12131.92