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Lessor ABC Corp. (the lessor) manufactures equipment for sale or lease. On December 31, 2018,...

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Accounting

Lessor ABC Corp. (the lessor) manufactures equipment for sale or lease. On December 31, 2018, ABC leased equipment to DEF Inc. for five years, with ownership of the equipment being transferred to DEF at the end of the lease. Annual lease payments are $126,000. The payment is due on December 31 of each year. The first payment was made on December 31, 2018. The normal sales price of the equipment (fair value) is $462,000, and ABCs cost is $360,000. There is no residual value. Provide all journal entries for ABC (the lessor) for December 31, 2018 and December 31, 2019. You will need to calculate the interest rate. Use 2 decimals of accuracy. For example, 6.35%.

You may use handwritten calculations to determine all your figures for this lease. You may also type them. Your choice.

You must type your journal entries below.

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