Prepare Crane May journal entries

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Question - Carla vista crop, which uses ASPE, manufactures replicators. On May 29, 2020, it leased to Sheffield Limited a replicator that cost $265,800 to manufacture and usually sells for $419,000. The lease agreement covers the replicator's 6-year useful life and requires six equal annual rentals of $78,167 each, beginning May 29, 2020. The equipment reverts to Crane at the end of the lease, at which time it is expected that the replicator will have a residual value of $45,600, which is not guaranteed by Sheffield, the lessee. An interest rate of 8% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Prepare Crane's May 29, 2020 journal entries.

Reference no: EM132675702

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