Prepare all of the lessor journal entries for the first year

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Reference no: EM132461066

Problem - Bridgeport Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $320,879, and its unguaranteed residual value at the end of the lease term is estimated to be $19,500. National will pay annual payments of $38,100 at the beginning of each year. Bridgeport incurred costs of $198,000 in manufacturing the equipment and $4,300 in sales commissions in closing the lease. Bridgeport has determined that the collectability of the lease payments is probable and that the implicit interest rate is 5%.

Required -

1. Compute the amount of each of the following items.

(i) Lease receivable

(ii) Sales price

(iii) Cost of sales

2. Prepare a 10-year lease amortization schedule for Bridgeport, the lessor.

3. Prepare all of the lessor's journal entries for the first year.

Reference no: EM132461066

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