Sandhill Corp. is a manufacturer of truck trailers. On January 1, 2021, Sandhill Corp. leases 9 trailers to Whispering Company under a 5-year noncancelable lease agreement. The following information about the lease and the trailers is provided:

1.

Equal annual payments that are due on January 1 each year provide Sandhill Corp. with a 12% return on net investment.

2.

Titles to the trailers pass to Whispering at the end of the lease.

3.

The fair value of each trailer is $50,500. The cost of each trailer to Sandhill Corp. is $45,100. Each trailer has an expected useful life of nine years.

4.

Collectibility of the lease payments is probable.

Prepare a lease amortization schedule for Sandhill Corp. for the first three years. (Round answers to 0 decimal places e.g. 5,275.)

Sandhill Corp. Lease Amortization Schedule (Lessor)

Date

Annual Lease Rental

Interest on Lease Receivable

Lease Receivable Recovery

Lease Receivable

1/1/21

$

1/1/21

$

$

$

1/1/22

1/1/23

Prepare the journal entries for the lessor for 2021 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
January 1, 2021December 31, 2021
	(To record the lease)
January 1, 2021December 31, 2021
	(To record receipt of the first lease payments)
January 1, 2021December 31, 2021