Sandhill Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2017. The lease is for an 8-year period and requires equal annual payments of $30,232 at the beginning of each year. The first payment is received on January 1, 2017. Sandhill had purchased the machine during 2016 for $105,000. Collectibility of lease payments by Sandhill is probable. Sandhill set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Sandhill at the termination of the lease.

n=8yrs=1.59385 ratio Future Value

a.)

Compute the amount of the lease receivable.

Amount of lease receivable: $

b.)

Prepare all necessary journal entries for Sandhill for 2017.

Date	Account Title	Debit	Credit
1/1/17
	(to record the lease)
	(To record the first lease payment)
12/31/17

c.)

Suppose the collectibility of the lease payments was not probable for Sandhill. Prepare the necessary journal entry for the company in 2017.

Date	Account Title	Debit	Credit
1/1/17

d.)

Suppose at the end of the lease term, Sandhill receives the asset and determines that it actually has a fair value of $1,190 instead of the anticipated residual value of $0. Record the entry to recognize the receipt of the asset for Sandhill at the end of the lease term

Date	Account Title	Debit	Credit
1/1/17