Teal Mountaln Leasing Company slgns a lease agreement on January 1, 2020, to lease electronic equipment to Sandhill Company. The term of the non-cancelable lease Is 2 years, and payments are required at the end of each year. The following Informationrelates to thts agreement:1.Sandhill has the option to purchase the equlpment for S25,000 upon terminatlon of the lease. it is not reasonably certaln that Sandhill will exercse this optlon.2.The equlpment has a cost of $300,000 and falr value of $349,000 to Teal Mountaln Leasing. The useful economic life is 2 years, with a residual value of $25,000,3.Teal Mountaln Leasing desIres to eam a retum of 5%% en Its Investment.4.Collectibility of the payments by Teal Mountaln Leasing Is probable.Click here bO View factor tables.,Prepare the journal entries on the books of Teal Mountain Leasing to reflect the payments recelved under the lease and to recognize Income for the years 2020 and 2021. (credit account titles are automadcally indented when amount is entere. Do notinderrt manually. For calculation purposes, use 5 decinmal places as displayed in the factor table provided and roond final answers to O decfmal places e.g.5,275.)DateAccount Tides and ExplanationDebitCredit

Journal entry is the primary entry that records the financial transactions initially.

Sandhill has the option to purchase the equipment for $25,000 upon termination of the lease. It is not reasonably certain that Sandhill will exerdse this option. The equipment has a cost of $300,000 and falr value of $349,000 to Teal Mountaln Leasing. The useful economic life is 2 years, with a residual value of $25,000. Teal Mountain Leasing destres to earm a returm of 5% on its investment. Collectibility of the payments by Teal Mountain Leasing is probable. 1. 2. 3. 4.

Sandhill has the option to purchase the equipment for $25,000 upon termination of the lease. It is not reasonably certain that Sandhill will exerdse this option. The equipment has a cost of $300,000 and falr value of $349,000 to Teal Mountaln Leasing. The useful economic life is 2 years, with a residual value of $25,000. Teal Mountain Leasing destres to earm a returm of 5% on its investment. Collectibility of the payments by Teal Mountain Leasing is probable. 1. 2. 3. 4.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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