Windsor Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years. The normal selling price of the machine is $497,041, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $15,900. The hospital will pay rents of $60,100 at the beginning of each year. Windsor incurred costs of $249,000 in manufacturing the machine and $13,800 in legal fees directly related to the signing of the lease. Windsor has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%. Click here to view factor tables.

(a)

Discuss the nature of this lease in relation to the lessor. The nature of this lease in relation to the lessor is sales-type leaseoperating leasefinance lease. Compute the amount of each of the following items (lease receivable at commencement of the lease, sales price, cost of sales)

b. Prepare a ten year lease amortization schedule

c. Prepare all of the lessors journal entries for the first year