Universal Leasing leases electronic equipment to a variety of businesses. The company's primary service is providing alternate financing by acquiring equipment and leasing it to customers under long-term sales-type leases. Universal earns Interest under these arrangements at a 9% annual rate. The company leased an electronic typesetting machine it purchased for $49,900 to a local publisher, Desktop Inc., on December 31, 2020. The lease contract specified annual payments of $10,249 beginning January 1, 2021, the beginning of the lease, and each December 31 through 2022 (three-year lease term). The publisher had the option to purchase the machine on December 30, 2023, the end of the lease term, for $28,000 when it was expected to have a residual value of $32,000, a sufficient difference that exercise seems reasonably certain (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use approprlate factor(s) from the tables provided.) Required: 1. Show how Universal calculated the $10,249 annual lease payments for this sales-type lease. 2. Prepare an amortization schedule that describes the pattern of Interest revenue for Universal Leasing over the lease term. 3. Prepare the appropriate entries for Universal Leasing from the beginning of the lease through the end of the lease term. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Show how Universal calculated the $10,249 annual lease payments for this sales-type lease. (Round your intermediate and final answers to the nearest whole dollar amount. Enter decreases with a minus sign.) S 49,900 Amount to be recovered Less: Present value of the exercise price Amount to be recovered through periodic lease payments Lease payments at the beginning each of three years 21,6211 28,279 S S 10,249 Universal Leasing leases electronic equipment to a variety of businesses. The company's primary service is providing alternate financing by acquiring equipment and leasing it to customers under long-term sales-type leases. Universal earns Interest under these arrangements at a 9% annual rate. The company leased an electronic typesetting machine it purchased for $49,900 to a local publisher, Desktop Inc., on December 31, 2020. The lease contract specified annual payments of $10,249 beginning January 1, 2021, the beginning of the lease, and each December 31 through 2022 (three-year lease term). The publisher had the option to purchase the machine on December 30, 2023, the end of the lease term, for $28,000 when it was expected to have a residual value of $32,000, a sufficient difference that exercise seems reasonably certain. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use approprlate factor(s) from the tables provided.) Required: 1. Show how Universal calculated the $10,249 annual lease payments for this sales-type lease. 2. Prepare an amortization schedule that describes the pattern of Interest revenue for Universal Leasing over the lease term. 3. Prepare the appropriate entries for Universal Leasing from the beginning of the lease through the end of the lease term. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare an amortization schedule that describes the pattern of interest revenue for Universal Leasing over the lease term. (Round your intermediate and final answers to the nearest whole dollar amount. Enter all amounts as positive values.) Lease Amortization Schedule Effective Decrease in Outstanding Date Payments Interest Balance Balance 49.900 01/01/2021 10,249 10,249 39,651 12/31/2021 10,249 3,569 6,680 32,971 12/31/2022 10,249 2.967 3,713 29,258 12/31/2023 28,000 (1.258) Total 58,747 Journal entry worksheet Record the lease. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2021 Record entry Clear entry View general journal
