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Skor Co. leased equipment to Douglas Corp on January 2, 2011 for a 7-year period expiring December 31, 2017. Equal payments under the lease are
Skor Co. leased equipment to Douglas Corp on January 2, 2011 for a 7-year period expiring December 31, 2017. Equal payments under the lease are $600,000 and are due on January 2 of each year. The first payment was made on January 2, 2011. The cost of the equipment is $2, 400,000. The lease is appropriately accounted for as a sales-type lease. The present value of the lease payments is $2, 800,000. What is the entry to Cost of Goods Sold for the year ended December 31, 2011? a) $514, 286 b) $600,000 c) $342, 857 d) $2, 400,000 e) $2, 800,000
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