Question $6$ of $10$

$-13$

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Crane Company leases a building to Blossom, Inc. on January $1,2025.$ The following facts pertain to the lease agreement.

The lease term is $5$ years, with equal annual rental payments of $$4,633$ at the beginning of each year.

Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.

The building has a fair value of $$22,100,$ a book value to Crane of $$15,100,$ and a useful life of $6$ years.

At the end of the lease term, Crane and Blossom expect there to be an unguaranteed residual value of $$3,780.$

Crane wants to earn a return of $9\%$ on the lease, and collectibility of the payments is probable. This rate is known by Blossom.

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$($b$)$ Using the original facts of the lease, show the journal entries to be made by both Crane and Blossom in $2025.($List all debit entries before credit entries. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. For calculation purposes, use $5$ decimal places as displayed in the factor table provided and round final answers to $0$ decimal places, e$.$g$.5,275.$ Credit account titles are automatically indented when the amount is entered. Do not indent manually.$)$

Question $6$ of $10$

$\frac{-}{3}$

Crane's Journal Entries

Date Account Titles and Explanation

Blossom's Journal Entries

Date Account Titles and ExplanationZ