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Crane Company leases a building to Blossom, Inc. on January $1,2025.$ The following facts pertain to the lease agreement.

The lease term is $5$ years, with equal annual rental payments of $$4,633$ at the beginning of each year.

Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.

The building has a fair value of $$22,100,$ a book value to Crane of $$15,100,$ and a useful life of $6$ years.

At the end of the lease term, Crane and Blossom expect there to be an unguaranteed residual value of $$3,780.$

Crane wants to earn a return of $9\%$ on the lease, and collectibility of the payments is probable. This rate is known by Blossom.

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places as displayed in the factor table provided and round final answers to $0$ decimal places, e$.5,5,275.$ Credit account titles are automatically indented when the amount is entered. Do not indent manually.$)$

Crane's Journal Entries

Date

$\frac{1}{1}\frac{?}{25}$

Account Titles and Explanation

Debit

Credit

$\backslash$table$[[$Lease Receivable,,$],[$Cost of Goods Sold,$9389,],[$Sales Revenue,,$],[$Cash$,,],[($To record the lease$),,],[$Lease Receivable,,$]]$

Blossom's Journal Entries

Date

$\frac{1}{1}\frac{?}{25}$

$\frac{1}{1}\frac{?}{25}$

$1/1/25$

$\frac{1}{1}\frac{?}{25}$

Account Titles and Explanation

Lease Liability

$($To record the lease$)$

Lease Liability

$($To record lease payment$)$

Interest Expense

$[$

$($To record interest expense$)$

$L$

$($To record amortization of the right$-$of$-$use asset$)$

Debit

Credit