Use the information for Merrill Corporation from BE20-11. Assume that for Moxey Corporation, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the equipment's carrying amount is $121,000. Prepare Moxey's September 13, 2017 journal entries.
In BE20-11
Merrill Corporation, which uses ASPE, enters into a six-year lease of equipment on September 13, 2017 that requires six annual payments of $28,000 each, beginning September 13, 2017. In addition, Merrill guarantees the lessor a residual value of $17,000 at lease end. The equipment has a useful life of six years. Using tables, a financial calculator, or Excel functions, calculate the amount of the capital lease and prepare Merrill's September 13, 2017 journal entries, assuming an interest rate of 9%.