Problem 21A-9 a2-c Flounder Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $298,352, and its unguaranteed residual value at the end of the lease term is estimated to be $18,300. National will pay annual payments of $40,000 at the beginning of each year. Flounder incurred costs of $185,300 in manufacturing the equipment and $3,700 in sales commissions in closing the lease. Flounder has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 8%.

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 o decimal places, e.g. 5,275.) (1) Lease receivable (2) Sales price 298,352 (3) Cost of sales SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Interest on Lease Receivable Lease Receivable Beginning Annual Lease Payment of Year Plus Residual Value Lease Initial PV 40,000 40,000 40,000 | 40,000|| | 40,000 TTTTTTTTTP 40,000 40,000 | 40,000 | 40,000|| | 40,000 End of 10 Prepare all of the lessor's journal entries for the first year. (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. Round answers to 0 decimal places e.g. 5,275.) Account Titles and Explanation Debit Credit Lease Receivable an.000 Cost of Goods Sold 1 1 T Sales Revenue 40,000 22 Inventory 40,000 (To record the sale and the cost of goods sold in the lease transaction. Tselling Expenses 1 3,700 TCash (To record payment of the initial direct costs relating to the lease.) 3,700 cash 40,000 Lease Receivable (To record receipt of the first lease payment.) Tinterest Receivable 40.00 T Interest Revenue 1 40,000