On January 1, 2017, Irwin Animation sold a truck to Peete Finance for $35,000 and immediately leased it back. The truck was carried on Irwin's books at $28,000. The terr the lease is 5 years, there is no bargain purchase option, and title does not transfer to Irwin at lease-end. The lease requires 5 equal rental payments of $8,309 at the end each year (first payment on January 1, 2018). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the term. Prepare Irwin's 2017 journal entries assuming these new facts. Must use factor table.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2017, Irwin Animation sold a truck to Peete Finance for $35,000 and immediately leased it back. The truck was carried on Irwin's books at $28,000. The term of
the lease is 5 years, there is no bargain purchase option, and title does not transfer to Irwin at lease-end. The lease requires 5 equal rental payments of $8,309 at the end of
each year (first payment on January 1, 2018). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease
term. Prepare Irwin's 2017 journal entries assuming these new facts. Must use factor table.
Transcribed Image Text:On January 1, 2017, Irwin Animation sold a truck to Peete Finance for $35,000 and immediately leased it back. The truck was carried on Irwin's books at $28,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Irwin at lease-end. The lease requires 5 equal rental payments of $8,309 at the end of each year (first payment on January 1, 2018). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Irwin's 2017 journal entries assuming these new facts. Must use factor table.
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