Lisa Company (lessor) leased machinery to Jennie Company on January 2, 2019, for a ten-year period. Equal
Question:
Lisa Company (lessor) leased machinery to Jennie Company on January 2, 2019, for a ten-year period. Equal annual payments under the lease are $131,710 and are due on January 2 of each year. The first payment was made on January 2, 2019. The rate of interest used by Lisa is 7% and is known by Jennie.
The cost of the machinery on Lisa's accounting records was $700,000. The machinery is estimated to have an unguaranteed residual value of $20,000. The lease is appropriately recorded as a sales-type lease for accounting purposes by Lisa. The present value of an annuity due of 1 for
10 years at 7% is 7.51523. The present value of 1 for 1
10 years at 7% is 0.50835. Lisa uses the straight-line method of depreciation for all of its fixed assets.
a. The entries recorded by Lisa related lease contract on January 2, 2020 will include.
b. the amount that should be reported by Lisa as the balance of total lease receivable and interest receivable on its December 31,2019 statement of financial position is.
a. 929070
b. 868290
c.131070
d. 797360
