Stellar Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $288,269, and its unguaranteed residual value at the end of the lease term is estimated to be $18,400. National will pay annual payments of $41,600 at the beginning of each year and all maintenance, insurance, and taxes. Stellar incurred costs of $171,900 in manufacturing the equipment and $4,200 in negotiating and closing the lease. Stellar has determined that the collectibility of the lease payments is reasonably predictable, that no additional costs will be incurred, and that the implicit interest rate is 10%.

*REQUIRES USE OF FACTOR TABLES*

Compute the amount of each of the following items. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

(1)		Lease receivable		$
(2)		Sales price		$
(3)		Cost of sales		$

Prepare a 10-year lease amortization schedule. (Round answers to 0 decimal places e.g. 58,971.)

Prepare all of the lessors journal entries for the first year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,971.)

List of Accounts

• Accounts Payable
• Accumulated DepreciationBuilding
• Accumulated DepreciationCapital Leases
• Accumulated DepreciationEquipment
• Airplanes
• Buildings
• Cash
• Cost of Goods Sold
• Depreciation Expense
• Equipment
• Executory Costs
• Executory Costs Payable
• Insurance Expense
• Interest Expense
• Interest Payable
• Interest Receivable
• Interest Revenue
• Inventory
• Land
• Leased Buildings
• Leased Equipment
• Leased Land
• Lease Liability
• Lease Receivable
• Loss on Capital Lease
• Machinery
• Maintenance and Repairs Expense
• No Entry
• Prepaid Lease Executory Costs
• Property Tax Expense
• Property Tax Payable
• Rent Expense
• Rent Payable
• Rent Receivable
• Rent Revenue
• Revenue from Sale-Leaseback
• Salaries and Wages Expense
• Sales Revenue
• Selling Expenses
• Trucks
• Unearned Profit on Sale-Leaseback
• Unearned Service Revenue

PLEASE SHOW ALL WORK

USE THE ABOVE TEMPLATES/FORMATS TO ANSWER ALL QUESTIONS

USE ONLY THE ABOVE ACCOUNT TITLES

REQUIRES USE OF FACTOR TABLES

THANK YOU

STELLAR COMPANY (Lessor) Lease Amortization Schedule Annuity Due Basis, Unguaranteed Residual Value Beginning Annual Lease Payment Plus Residual Value Interest on Lease Receivable Lease Receivable Recovery Lease Receivable of Year Initial PV 10 End of 10 Account Titles and Explanation Debit Credit (To record the sale and the cost of goods sold in the lease transaction.) (To record payment of the initial direct costs relating to the lease.) (To record receipt of the first lease payment.) (To record interest earned during the first year of the lease.)