Problem:
On January 1, 2013, Greenspan Corporation, a machinery dealer, leased to Geitner Inc. a machine that cost $127,000 to manufacture. The lease agreement covers the 6-year useful life of the machinery and requires 6 equal annual payments of $39,200 payable each January 1, beginning January 1, 2013. An interest rate of 11% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs.
Required:
Question: Prepare Greenspan's January 1, 2013, journal entries. Present value factor is 4.69590 for an annuity due and the present value factor for an ordinary annuity is 4.23054.
Note: Please show how to work it out.