Question: 1 On January 2 , 2 0 2 5 , Gold Star Leasing Company leases equipment to Brick Co . with 5 equal annual payments

1 On January 2,2025, Gold Star Leasing Company leases equipment to Brick Co. with 5 equal annual payments of $160,000 each, payable beginning January 2,2025. There is expected residual of $25,000 but it is not guaranteed. The equipment cost Gold Star $550,000. Brick's incremental borrowing rate is 10%, however it knows that Gold Star's implicit interest rate is 8%. The lease is appropriately classified as a finance/sales-type lease.
What journal entries will Gold Star make on January 2,2025 regarding this lease?
1 On January 2 , 2 0 2 5 , Gold Star Leasing

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