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give correct answer kudo Sandhill Company leases...

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Accounting

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give correct answer kudo
Sandhill Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement 1. 2. The lease term is 4 years, with equal annual rental payments of $4,499 at the beginning of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. The building has a fair value of $17,800, a book value to Sandhill of $10,800, and a useful life of 5 years. At the end of the lease term, Sandhill and Walsh expect there to be an unguaranteed residual value of $2,700 3. 4. 5. Sandhill wants to earn a return of 9% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. Sandhill Journal Entries Date Account Titles and Explanation Debit Credit 1/1/20 Lease Receivable 17800 Cost of Goods Sold 8887 Sales Revenue 15887 Inventory 10800 (To record the lease) 1/1/20 Cash 4499 Lease Receivable 4499 (To record lease payment) 12/31/20 Lease Receivable 1025 Interest Revenue 1025

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