Recording Sales-Type Lease Journal Entries No Residual Value

Franklin Co. leased its manufactured equipment to Parker Inc. for a 4-year term. Franklin Co. reported a book value of $55,000 for the equipment in its inventory account. The lease commenced on January 1, 2020, with the first annual payment of $18,500 due immediately. The equipment has a useful life of 4 years, an estimated fair value of $68,880, and no residual or salvage value. The implicit rate of the lease is 5% and collectibility of the lease payments from Parker is probable. Record Franklins required journal entry to record interest revenue on December 31, 2020.

Note: Round your answers to the nearest whole dollar.

Date	Account Name	Dr.	Cr.
Dec. 31, 2020		Answer	Answer
		Answer	Answer