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Wildhorse Corp. is a manufacturer of truck trailers. On January 1, 2021, Wildhorse Corp. leases 9 trailers to Blossom Company under a 5-year noncancelable lease
Wildhorse Corp. is a manufacturer of truck trailers. On January 1, 2021, Wildhorse Corp. leases 9 trailers to Blossom Company under a 5-year noncancelable lease agreement. The following information about the lease and the trailers is provided: 1. Equal annual payments that are due on January 1 each year provide Wildhorse Corp. with an 12% return on net investment. 2. Titles to the trailers pass to Blossom at the end of the lease. 3. The fair value of each trailer is $50,600. The cost of each trailer to Wildhorse Corp. is $45,800. Each trailer has an expected useful life of nine years. 4. Collectibility of the lease payments is probable. Click here to view factor tables. What type of lease is this for the lessor? Calculate the annual lease payment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Annual lease payment $ Wildhorse Corp. Lease Amortization Schedule (Lessor) Interest on Lease Lease Receivable Receivable Recovery Annual Lease Rental Lease Receivable Date 1/1/21 1/1/21 $ 1/1/22 1/1/23 Prepare the journal entries for the lessor for 2021 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue. (Credit account manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record receipt of the first lease payments)
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