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Berne Company (lessor) enters into a lease with Fox Company to lease equipment...

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Accounting

Berne Company (lessor) enters into a lease with Fox Company to lease equipment to Fox beginning January 1, Year 1. The lease terms, provisions, and related events are as follows:
The lease term is 4 years. The lease is noncancelable and requires annual rental payments of $50,000 to be made at the end of each year.
The equipment costs $130,000. The equipment has an estimated life of 4 years and an estimated residual value at the end of the lease term of zero.
Fox agrees to pay all executory costs directly to a third party.
The interest rate implicit in the lease is 12%.
The initial direct costs are insignificant and assumed to be zero.
The collectability of the rentals is reasonably assured.
Required:
Next Level Assuming that the lease is a sales-type lease from Berne's point of view, calculate the selling price and assume that this is also the fair value.
Prepare a table summarizing the lease receipts and interest income earned by Berne.
Prepare joumal entries for Beme, the lessor, for Year 1 and Year 2.
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