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Sage Hill Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Oriole Company. The term of the non-cancelable lease
Sage Hill Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Oriole Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement: 1. Oriole has the option to purchase the equipment for $17,000 upon termination of the lease. It is not reasonably certain that Oriole will exercise this option. 2. The equipment has a cost of $140,000 and fair value of $195,500 to Sage Hill Leasing. The useful economic life is 2 years, with an unguaranteed residual value of $17,000. 3. Sage Hill Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Sage Hill Leasing is probable. Click here to view the factor table. (a) (b) Assuming that Oriole exercises its option to purchase the equipment on December 31, 2018, prepare the journal entry to record the sale on Sage Hill Leasing's books. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 12/31/18 Click if you would like to Show Work for this question: Open Show Work
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