Rexon Company leases non-specialized equipment to Ten-Care Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 8 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. 2. The cost of the equipment is $700,000. The equipment has an estimated life of 8 years and has a zero estimated value at the end of that time. 3. The equipment has a fair value of $700,000. 4 Ten-Care agrees to pay all executory costs directly to a third party. 5. The lease contains no renewal or bargain purchase option. 6. The interest rate implicit in the lease is 12% 7. The initial direct costs are insignificant and assumed to be zero. 8. It is probable that Rexon will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. Required: 1. Next Level Assuming that the lease is a sales-type lease from Rexon's point of view, calculate the amount of the equal rental receipts 2. Prepare a table summarizing the lease receipts and interest income earned by Rexon 3. Prepare journal entries for Rexon for the years 2019 and 2020. 2. Prepare a table summarizing the lease receipts and interest income earned by Rexon. Additional Instructions 2 January 1, 2019 3 December 31, 2019 4 December 31, 2020 5 December 31, 2021 6 December 31, 2022 7 December 31, 2023 8 December 31, 2024 9 December 31, 2025 10 December 31, 2026 Date Rexon Company Summary of Lease Payments Received and Interest Income Earned Annual Lease Interest Income Payment at 12% on Net Reduction of Lease Receivable Lease Receivable Received Investment 1 2 3 4 5 6 7 PAGE 2019 GENERAL JOURNAL POST. REF. DEBIT CREDIT DATE ACCOUNT TITLE 3b. Prepare the journal entries for 2020. 1 2 GENERAL JOURNAL DATE ACCOUNT TITLE PAGE 2020 POST. REF. DEBIT CREDIT