Prepare Cullumbers May journal entries

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Question - Cullumber Corporation, which uses ASPE, manufactures replicators. On May 29, 2020, it leased to Crane Limited a replicator that cost $265,600 to manufacture and usually sells for $417,000. The lease agreement covers the replicator's 9-year useful life and requires 9 equal annual rentals of $66,982 each, beginning May 29, 2020. The equipment reverts to Cullumber at the end of the lease, at which time it is expected that the replicator will have a residual value of $47,900, which has been guaranteed by Crane, the lessee. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Prepare Cullumber's May 29, 2020 journal entries.

Reference no: EM132513673

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