Use the following information for questions 14-16. Round all calculations to the two decimals.

Uptown Inc. entered into an arrangement on January 1, 2017 to lease a machine for four years with lease payments of $85,000 each year with the first payment due immediately and January 1 of each year thereafter. There are no options to extend, terminate, or renew the lease. The lessor requires a return on its leases of this type of 8%, which is the same as Uptown Inc.s marginal borrowing rate.

14. Assuming that this lease meets the criteria for finance lease treatment and the lessor purchased the machine for $281,530.78 and regularly both sells and leases this type of equipment. Which of the following journal entries should the lessor record on January 1, 2017 (not including receipt of the first lease payment)?

a. Lease Receivable $304,053.24

Equipment $304,053.24

b. Lease Receivable $304,053.24

Equipment $281,530.78

Gain on Sale $ 22,522.46

c. Lease Receivable $281,530.78

Equipment $281,530.78

d. Lease Receivable $304,053.24

Sales Revenue $304,053.24

Cost of Goods Sold $281,530.78

Inventory $281,053.24

15. Assuming that the lease meets the criteria for finance lease treatment, which of the following journal entries should the lessee (Uptown Inc.) record on December 31, 2017?

a. Lease Expense $85,000

Current Lease Payable $85,000

b. Lease Payable $67,475.74

Interest Expense $17,524.26

Current Lease Payable $85,000

Amortization Exp. $76,013.31

Leased Asset $76,013.31

c. Lease Payable $67,475.74

Interest Expense $17,524.26

Current Lease Payable $85,000

Amortization Exp. $67,475.74

Leased Asset $67,475.74

d. Lease Payable $67,475.74

Interest Expense $17,524.26

Cash $85,000

Amortization Exp. $76,013.31

Leased Asset $76,013.31

16. Assuming, instead, that the lease qualifies for operating lease treatment, Uptown should record how much amortization expense in 2017?

a. Lease Expense $85,000

Current Lease Payable $85,000

b. Lease Payable $67,475.74

Interest Expense $17,524.26

Current Lease Payable $85,000

Amortization Exp. $76,013.31

Leased Asset $76,013.31

c. Lease Payable $67,475.74

Interest Expense $17,524.26

Current Lease Payable $85,000

Amortization Exp. $67,475.74

Leased Asset $67,475.74

d. Lease Payable $67,475.74

Interest Expense $17,524.26

Cash $85,000

Amortization Exp. $76,013.31

Leased Asset $76,013.31

Use the following information for questions 14-16. Round all calculations to the two decimals. Uptown Inc. entered into an arrangement on January 1, 2017 to lease a machine for four years with lease payments of $85,000 cach year with the first payment duc immediatcly and January 1 of cach year thereafter. There are no options to extend, terminate, or renew the leasc. The lisssor requires a refurn on ts leases of this type of 8%, which is the same as Uptown Inei's marginal borrowing rate. 14. Assuming that this lease meets the criteria for finance lease treatment and the lessor purchased tho machine for S281,530.78 and regularly both sells and lcascs this type of equipment. Which of the following journal entries should the lessor record on January 1,2017 (not including reccipt of the first lcase payment)? a. Lease Reccivable Equipment S304,053.24 b. Lease Receivable$304,053.24 Equipment Gain on Salc $281 530.78 S.22.522.46 c. Lease ReceivableS281,530.78 Equipment S281,530.78 d. Lease ReccivableS304,053.24 Sales Revenuc $304,053.24 Cost of Goods Sold $281.530.78 Inventory $281,053.24 15. Assuming that the lease meets the criteria for finance Icase treatment, which of the following joumal mntries should the lessee (Uptown Ine ) record orn Decembet 31.201 a. Lease Expense 85,000 Current Lease Payable $85,000 S67, 475.74 S17,524.26 b. Lease Payable Interest Expensc Current Lcase Payablc $85,000 Amortization Exp. $76,013.31 Leased Assct $76,013.31 c.Leasc Payable$67,475.74 Interest Expense$17.524.26 Current Lease Payable S8,000 Amortization E7475.74 Lcased Assct S6 d. . Lease Payable 67475.74 Interest Expenso 524.2 Cash $85,000 Amortization Exp $76.013.31 Leased Asset $76,01