Question $6$

Sheridan Corporation, which uses ASPE, enters into a $6-$year lease of equipment on September $1,2020,$ that requires $6$ annual payments of $$31,700$ each, beginning September $1,$

In addition, Sheridan guarantees the lessor a residual value of $$21,600$ at lease end. The equipment has a useful life of seven years. Assume an interest rate of $7\%.($Use tables

below, a financial calculator, or Excel functions.$)$

Click here to view the factor table PRESENT VALUE OF $1.$

Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF $1.$

Prepare a schedule contrasting the journal entries prepared using a guaranteed residual value with those using an unguaranteed residual value. Include in your schedule entries on

August $31,2021,$ for the year$-$end accrual of interest in the lease obligation and the recording of annual depreciation expense using the straight$-$line method and assuming no residual

value. $($Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account

titles and enter $0$ for the amounts. Round answers to $0$ decimal places, e$.$g$.5,275.)$

$($To record depreciation.$)$