What is amount of profit on the sale and the interest income

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Reference no: EM131295022

Roman Company leased equipment from Koenig Company on July 1, 2015, for an eight-year period expiring June 30, 2023. Equal annual payments under the lease are $600,000 and are due on July 1 of each year. The first payment was made on July 1, 2015. The rate of interest contemplated by Roman and Koenig is 8%. The cash selling price of the equipment is $3,723,750 and the cost of the equipment on Koenig’s accounting records was $3,300,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Koenig, what is the amount of profit on the sale and the interest income that Koenig would record for the year ended December 31, 2015? a. $0 and $0 b. $0 and $124,950 c. $423,750 and $124,950 d. $423,750 and $148,950

Reference no: EM131295022

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