Use
the information for Lai Corporation from BE20–11. Assume that instead of
costing Lai $175,000, the equipment was manufactured by Lai at a cost of
$137,500 and the equipment’s regular selling price is $175,000. Prepare Lai
Corporation’s January 1, 2011 journal entries at the inception of the lease and
the entry at December 31, 2011, to record interest.
Lease Payments Receivable............... 202,920
Sales............................... 175,000
Unearned
Interest Income—Leases .... 27,920
Cost of Goods Sold...................... 137,500
Inventory Finished
Goods............ 137,500
Cash.................................... 40,584
Lease
Payments Receivable........... 40,584
Unearned Interest Income—Leases......... 10,753
Interest
Income—Leases.............. 10,753
[($175,000 – $40,584) X 8%]
