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Assume that IBM leased equipment that was carried at a cost of $67,000 to Crane Company. The term of the lease is 5 years December 31, 2019, with equal rental payments of $22,879 beginning December 31, 2019. The fair value of the equipment at commencement of the lease is $97,001. The equipment has a useful life of 5 years with no salvage value. The lease has an implicit interest rate of 9%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Assume the sales-type lease was recorded at a present value of $97,001.

Required:
Prepare IBM's December 31, 2019, journal entries at commencement of the lease.

Respuesta :

Parrain

Answer:

Date                    Account Title                                 Debit                 Credit

Dec. 31, 2019     Lease Receivable                       $97,001

                           Cost of Goods sold                    $67,000

                           Sales Revenue                                                      $97,001

                           Inventory                                                                $67,000

Date                    Account Title                                 Debit                 Credit

Dec. 31, 2019      Cash                                          $22,879

                            Lease Receivable                                                 $22,879          

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