Problem
Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2014. The lease is for an 10-year period and requires equal annual payments of $33,118 at the beginning of each year. The first payment is received on January 1, 2014. Crosley had purchased the machine during 2013 for $164,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Crosley. Crosley set the annual rental to ensure an 8% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Crosley at the termination of the lease.
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Compute the amount of the lease receivable. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)
Prepare all necessary journal entries for Crosley for 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 58,971.)
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