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Please explain how you got the answer. This is all the information given. Thank you! Sage Hill Leasing Company signs a lease agreement on January
Please explain how you got the answer. This is all the information given. Thank you!
Sage Hill Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Oriole Company. The term of the non-cancelable lease is years, and payments are required at the end of each year. The following information relates to this agreement: 1. Oriole has the option to purchase the equipment for $22,500 upon termination of the lease. It is not reasonably certain that Oriole will exercise this option. 2. The equipment has a cost of $250,000 and fair value of $273,000 to Sage Hill Leasing. The useful economic life is 2 years, with an unguaranteed residual value of $22,500. 3. Sage Hill Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Sage Hill Leasing is probable. Your answer is partially correct. Prepare the journal entries on the books of Sage Hill Leasing to reflect the payments received under the lease and to recognize income for the years 2017 and 2018. (Credit acco are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/17 Lease Receivable 273000 Cost of Goods Sold 45000 Sales Revenue 45000 Inventory 1 250000 12/31/17 Cash 273000 Lease Receivable 125000 Interest Revenue 13650 12/31/18 Cash Lease Receivable Interest RevenueStep by Step Solution
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