Question: On January 1, 2017, Monty Animation sold a truck to Peete Finance for $28,550 and immediately leased it back. The truck was carried on Monty's books at $22,700. The term of the lease is 5 years, and title transfers to Monty at lease-end. The lease requires 5 equal rental payments of $7,151 at the end of each year. The appropriate rate of interest is 8%, and the truck has a useful life of 5 years with no salvage value.
Prepare Monty's 2017 journal entries. To record amortization of profit on sale use Depreciation Expense account (DEA) and not Sales Revenue account. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. 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.)