Make journal entries on the books of anne company

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Question - On January 1, 2020, Anne Company leased equipment to Meg Company for an eight-year period expiring January 1, 2028 Equal payments under the lease are P600,000 and are due on January 1 of each year. The first payment was made on January 1, 2020. The rate of interest contemplated is 10% The cash selling price of the equipment is P3,520,000 and the cost of the equipment is P2,800,000.

Anne Company paid initial direct costs of P50,000 in negotiating and arranging the lease. The lease is appropriately recorded as a sales type lease.

Required - Make journal entries on the books of Anne Company for 2020 and 2021.

Reference no: EM133166771

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