Question

Crane Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $30,688 at the beginning of each year. The first payment is received on January 1, 2020. Crane had purchased the machine during 2016 for $115,000. Collectibility of lease payments by Crane is probable. Crane set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Crane at the termination of the lease.

Click here to view factor tables.

Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places e.g. 5,275.)

Amount of the lease receivable

$enter a dollar amount of the lease receivable rounded to 0 decimal places

Prepare all necessary journal entries for Crane for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
1/1/20	enter an account title to record the lease on January 1	enter a debit amount	enter a credit amount
	enter an account title to record the lease on January 1	enter a debit amount	enter a credit amount
	enter an account title to record the lease on January 1	enter a debit amount	enter a credit amount
	enter an account title to record the lease on January 1	enter a debit amount	enter a credit amount
	(To record the lease)
	enter an account title to record the first lease payment on January 1	enter a debit amount	enter a credit amount
	enter an account title to record the first lease payment on January 1	enter a debit amount	enter a credit amount
	(To record the first lease payment)
12/31/20	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31	enter a debit amount	enter a credit amount

Suppose the collectibility of the lease payments was not probable for Crane. Prepare the necessary journal entry for the company in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
1/1/20	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount

Suppose at the end of the lease term, Crane receives the asset and determines that it actually has a fair value of $1,150 instead of the anticipated residual value of $0. Record the entry to recognize the receipt of the asset for Crane at the end of the lease term. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
1/1/20	enter an account title for the journal entry on January 1	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1

Answer 1