Sheridan Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $31,448 at the beginning of each year. The first payment is received on January 1, 2020. Sheridan had purchased the machine during 2016 for $116,000. Collectibility of lease payments by Sheridan is probable. Sheridan 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 Sheridan at the termination of the lease.

1. Compute the amount of the lease receivable.

2. Prepare all necessary journal entries for Sheridan for 2020.

3. Suppose the collectibility of the lease payments was not probable for Sheridan. Prepare the necessary journal entry for the company in 2020.

4. Suppose at the end of the lease term, Sheridan receives the asset and determines that it actually has a fair value of $980 instead of the anticipated residual value of $0. Record the entry to recognize the receipt of the asset for Sheridan at the end of the lease term.

PLEASE ANSWER ALL QUESTIONS, 1-4.

Thank you

Prepare all necessary journal entries for Sheridan for 2020. (Credit account titles are automatically indented when amount is entered. Do not ir decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/20 Lease Receivable 56319 Cost of Goods Sold 116000 Inventory 116000 Sales Revenue 56319 (To record the lease) Cash 31448 Lease Receivable 31448 (To record the first lease payment) 12/31/20 Interest Receivable 1887 Interest Revenue 1887