Shamrock Leasing Company signs a lease agreement on January 1, 2016, to lease electronic equipment to Pharoah 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.Pharoah has the option to purchase the equipment for $23,000 upon termination of the lease. It is not reasonably certain that Pharoah will exercise this option.

2.The equipment has a cost of $260,000 and fair value of $290,000 to Shamrock Leasing. The useful economic life is 2 years, with a residual value of$23,000.3.Shamrock Leasing desires to earn a return of 5% on its investment.4.Collectibility of the payments by Shamrock Leasing is probable.

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Prepare the journal entries on the books of Shamrock Leasing to reflect the payments received under the lease and to recognize income for the years 2016 and 2017. and round final answers to 0 decimal places e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

1/1/16

12/31/16

12/31/17

enter an account title for the journal entry on January 1 2016

enter a debit amount

enter a credit amount

enter an account title for the journal entry on January 1 2016

enter a debit amount

enter a credit amount

enter an account title for the journal entry on January 1 2016

enter a debit amount

enter a credit amount

enter an account title for the journal entry on January 1 2017

enter a debit amount

enter a credit amount

1/1/16

12/31/16

12/31/17

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

1/1/16

12/31/16

12/31/17

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

SHOW LIST OF ACCOUNTS

Assuming that Pharoah exercises its option to purchase the equipment on December 31, 2017, prepare the journal entry to record the sale on Shamrock Leasing's books.

Date

Account Titles and Explanation

Debit

Credit

12/31/17

enter an account title for the journal entry on December 31 2017

enter a debit amount

enter a credit amount

enter an account title for the journal entry on December 31 2017

enter a debit amount

enter a credit amount

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