Equal annual payments under the lease

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Reference no: EM131872136

J & J leased equipment from Action Company on July 1, 2015 for an eight-year period. Equal annual payments under the lease are $300,000 and are due on July 1 of each year. The first payment was made on July 1, 2015. The incremental rate of interest for J & J is 8%. The cash selling price of the equipment is $1,861,875. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Action, give the entry for J & J and Action for the initial lease. If you are unable to prepare the entries, what information is missing?

Reference no: EM131872136

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