On January 1 of Year 1, Ashe Company entered into a five-year equipment lease (with no renewal options) requiring payments of $11,000, with the first payment due immediately. The lessor's implicit interest rate, known to Ashe, is 6%. Ownership of the equipment remains with the lessor at expiration of the lease. There is no option to purchase the property at the end of the lease term and the equipment is expected to have no residual value. The equipment has an estimated economic life of five years.

Answer the following questions from the lessor's perspective, assuming that leased equipment was carried in the lessor's financial records at $39,600.

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Date Jan. 1, Year 1 Jan. 1, Year 1 $ Jan. 1, Year 2 $ Jan. 1, Year 3 $ Jan. 1, Year 4 $ Jan. 1, Year 5 $ $ Lease Payment Interest on Receivable 11,000 $ 11,000 $ 11,000 $ 11,000 $ 11,000 $ 55,000 $ Lease Receivable 0 $ 2,287 $ 1,764 $ 1,210 $ 623 $ 5,884 $ Lease Change Receivable $ 49,116 38,116 29,403 20,167 10,377 0 11,000 $ 8,713 $ 9,236 $ 9,790 $ 10,377 $ 49,116 Date Jan. 1, Year 1 Jan. 1, Year 1 $ Jan. 1, Year 2 $ Jan. 1, Year 3 $ Jan. 1, Year 4 $ Jan. 1, Year 5 $ $ Lease Payment Interest on Receivable 11,000 $ 11,000 $ 11,000 $ 11,000 $ 11,000 $ 55,000 $ Lease Receivable 0 $ 2,287 $ 1,764 $ 1,210 $ 623 $ 5,884 $ Lease Change Receivable $ 49,116 38,116 29,403 20,167 10,377 0 11,000 $ 8,713 $ 9,236 $ 9,790 $ 10,377 $ 49,116

Answer rating: 100% (QA)

DATE ACCOUNT NAME DEBIT CREDIT January 1 Year 1 LEAS... View the full answer