An asset with a cost of $80,000 is leased on 1/1/x1. The lease is a sales-type lease for the lessor. Six annual lease payments are due on December 31 beginning on 12/31/x1. The asset will have no residual value. The lessor sets a rate of return of 8% and charges the lessee annual lease payments of $20,550. 4.62288 4.99271 Present value factor of an ordinary annuity for six years at 8% Present value factor of an annuity due for six years at 8% Present value factor of a single sum for a six-year term at 8% .63017 In the journal entry at the inception of the lease under the gross method, what amount does the lessor credit to unearned interest? Group of answer choices A. $28,300 D. $43,300 B. $95,000 C. $123,300
An asset with a cost of $80,000 is leased on 1/1/x1. The lease is a sales-type lease for the lessor. Six annual lease payments are due on December 31 beginning on 12/31/x1. The asset will have no residual value. The lessor sets a rate of return of 8% and charges the lessee annual lease payments of $20,550. 4.62288 4.99271 Present value factor of an ordinary annuity for six years at 8% Present value factor of an annuity due for six years at 8% Present value factor of a single sum for a six-year term at 8% .63017 In the journal entry at the inception of the lease under the gross method, what amount does the lessor credit to unearned interest? Group of answer choices A. $28,300 D. $43,300 B. $95,000 C. $123,300
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:An asset with a cost of $80,000 is leased on 1/1/x1. The lease is a sales-type lease for the lessor. Six annual lease payments are due on December 31 beginning on
12/31/x1. The asset will have no residual value. The lessor sets a rate of return of 8% and charges the lessee annual lease payments of $20,550.
Present value factor of an ordinary annuity for six years at 8%
Present value factor of an annuity due for six years at 8%
Present value factor of a single sum for a six-year term at 8%
.63017
In the journal entry at the inception of the lease under the gross method, what amount does the lessor credit to unearned interest?
Group of answer choices
A. $28,300
D. $43,300
B. $95,000
C. $123,300
4.62288
4.99271
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