Lessory Corporation, a manufacturer of equipment, enters into a lease of specialized equipment with LesseeX Corp. Title to the asset remains with Lessory Corp upon lease expiration. LesseeX Corp does not guarantee the residual value of the specialized equipment at the end of the lease term, and the lease contains no renewal or purchase options. The following information pertains to the lease.

Lease term	5 years
Economic life of the leased equipment	6 years
Annual lease payments	$329
Payment date	Annually on January 1
Fair value of the leased equipment	$1,560
Lessory Corp’s carrying value of the leased equipment	$1,350
Rate implicit in the lease (known by lessee)	5.96%
Estimated fair value of the equipment at the end of the lease term	$120

d. Provide all journal entries relating to the lease for Lessory Corporation for 2020 and 2021.

• Note: List multiple debits or credits (when applicable) in alphabetical order.
• Note: Round your answers to the nearest whole dollar.

Date	Account Name	Dr.	Cr.
Jan. 1, 2020		Answer	Answer
		Answer	Answer
		Answer	Answer
		Answer	Answer
	To record sale
Jan. 1, 2020		Answer	Answer
		Answer	Answer
	To record receipt of lease payment
Dec. 31, 2020		Answer	Answer
		Answer	Answer
	To record interest
Jan. 1, 2021		Answer	Answer
		Answer	Answer
	To record receipt of lease payment
Dec. 31, 2021		Answer	Answer
		Answer	Answer
	To record interest

e. What is the gross profit recorded for this lease in 2020? If the lessor determined that the unguaranteed residual value were $0 (instead of $400), what gross profit would be recorded in 2020?

Note: Use no negative signs with your answers.

	2020 (With Unguaranteed Residual Value)	2020 (With No Unguaranteed Residual Value)
Sales	Answer	Answer
Less cost of goods sold	Answer	Answer
Gross profit	Answer	Answer

Answer rating: 100% (QA)

A lease is normally classified as a finance lease if any of the following conditions apply The asset ... View the full answer