Use the information for Edom Company in E20-8, except that the residual value was guaranteed by Davis Company (the lessee).

Required:
1. Assuming that the lease is a sales-type lease, calculate the selling price.
2. Prepare a table summarizing the lease receipts and interest income earned by Edom.
3. Prepare journal entries for Edom for the years 2019 and 2020.

E20-8

Edom Company, the lessor, enters into a lease with Davis Company to lease equipment to Davis beginning January 1, 2019. The lease terms, provisions, and related events are as follows:
1. The lease term is 5 years. The lease is noncancelable and requires annual rental receipts of $100,000 to be made in advance at the beginning of each year.
2. The equipment costs $313,000. The equipment has an estimated life of 6 years and, at the end of the lease term, has an unguaranteed residual value of $20,000 accruing to the benefit of Edom.
3. Davis agrees to pay all executory costs directly to a third party.
4. The interest rate implicit in the lease is 14%.
5. The initial direct costs are insignificant and assumed to be zero.
6. It is probable that Edom will collect the lease payments.