On January 1, 2021, Calloway Company leased a machine to Zone Corporation. The lease qualifies as a sales-type lease. Calloway paid $300,000 for the machine and is leasing it to Zone for $33,000 per year, an amount that will return 8% to Calloway. The present value of the lease payments is $300,000. The lease payments are due each January 1, beginning in 2021. What is the appropriate interest entry on December 31, 2021? Multiple Choice Cash Interest revenue. Cash Interest receivable Interest receivable Interest revenue. Interest receivable Interest revenue 24,000 21,360 21,360 24,000 24,000 21,360 21,360 24,000

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 1, 2021, Calloway Company leased a machine to Zone Corporation. The lease qualifies as a sales-type
lease. Calloway paid $300,000 for the machine and is leasing it to Zone for $33,000 per year, an amount that will
return 8% to Calloway. The present value of the lease payments is $300,000. The lease payments are due each
January 1, beginning in 2021. What is the appropriate interest entry on December 31, 2021?
Multiple Choice
Cash
Interest revenue.
Cash
Interest receivable
Interest receivable
Interest revenue.
Interest receivable
Interest revenue
24,000
21,360
21,360
24,000
24,000
21,360
21,360
24,000
Transcribed Image Text:On January 1, 2021, Calloway Company leased a machine to Zone Corporation. The lease qualifies as a sales-type lease. Calloway paid $300,000 for the machine and is leasing it to Zone for $33,000 per year, an amount that will return 8% to Calloway. The present value of the lease payments is $300,000. The lease payments are due each January 1, beginning in 2021. What is the appropriate interest entry on December 31, 2021? Multiple Choice Cash Interest revenue. Cash Interest receivable Interest receivable Interest revenue. Interest receivable Interest revenue 24,000 21,360 21,360 24,000 24,000 21,360 21,360 24,000
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