Sandhill Leasing Limited, which has a fiscal year end of October 31 and follows IFRS 16, signs an agreement on January 1, 2020, to lease equipment to Irvine Limited. The following information relates to the agreement.

1.		The term of the non-cancellable lease is six years, with no renewal option. The equipment has an estimated economic life of eight years.
2.		The assets cost to Sandhill, the lessor, is $316,000. The assets fair value at January 1, 2020, is $316,000.
3.		The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $45,404, which is not guaranteed.
4.		Irvine Limited, the lessee, assumes direct responsibility for all executory costs.
5.		The agreement requires equal annual rental payments, beginning on January 1, 2020.
6.		Collectibility of the lease payments is reasonably predictable. There are no important uncertainties about costs that have not yet been incurred by the lessor.

Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.

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Assuming that Sandhill Leasing desires a 9% rate of return on its investment, use time value of money tables, a financial calculator, or Excel functions to calculate the amount of the annual rental payment that is required. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.)

Annual rental payment

$enter the Annual rental payment in dollars rounded to 0 decimal places

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Prepare an amortization schedule using a spreadsheet that would be suitable for the lessor for the lease term. (Round answers to 0 decimal places, e.g. 5,275.)

Sandhill Leasing Corporation (Lessor) Lease Amortization Schedule
Date		Annual Lease Payment Plus URV		Interest on Net Investment		Net Investment Recovery		Balance of Net Investment
1/1/20								$enter a dollar amount
1/1/20		$enter a dollar amount				$enter a dollar amount		enter a dollar amount
1/1/21		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
1/1/22		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
1/1/23		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
1/1/24		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
1/1/25		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
12/31/25		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
		$enter a total amount		$enter a total amount		$enter a total amount

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Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease payments, and the recognition of income. Assume that Sandhill prepares adjusting journal entries only at the end of the fiscal year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
1/1/20	enter an account title to record inception of lease and collection of lease payment	enter a debit amount	enter a credit amount
	enter an account title to record inception of lease and collection of lease payment	enter a debit amount	enter a credit amount
	enter an account title to record inception of lease and collection of lease payment	enter a debit amount	enter a credit amount
	enter an account title to record inception of lease and collection of lease payment	enter a debit amount	enter a credit amount
	(To record inception of lease and collection of lease payment.)
choose a transaction date 1/1/2031/10/201/1/2131/10/21	enter an account title to record interest	enter a debit amount	enter a credit amount
	enter an account title to record interest	enter a debit amount	enter a credit amount
	(To record interest.)
choose a transaction date 1/1/2031/10/201/1/2131/10/21	enter an account title to record the Collection of lease payment	enter a debit amount	enter a credit amount
	enter an account title to record the Collection of lease payment	enter a debit amount	enter a credit amount
	(Collection of lease payment.)
choose a transaction date 1/1/2031/10/201/1/2131/10/21	enter an account title to record interest	enter a debit amount	enter a credit amount
	enter an account title to record interest	enter a debit amount	enter a credit amount
	(To record interest.)

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List of Accounts

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Prepare a comparative partial statement of income for Sandhill for fiscal years 2020 and 2021.

Sandhill Leasing Limited Statement of Income (partial) For the Year Ended October 31,
		2021		2020
select an opening section name RevenuesExpensesGross Profit / (Loss)DrawingsTotal ExpensesInvestmentsNet Profit / (Loss)Total Revenues
enter an income statement item		$enter a dollar amount		$enter a dollar amount