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To raise operating funds, North American Courier Corporation sold its building on January 1, 2021,...

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Accounting

To raise operating funds, North American Courier Corporation sold its building on January 1, 2021, to an insurance company for $500,000 and immediately leased the building back. The lease is for a 10-year period ending December 31, 2030, at which time ownership of the building will revert to North American Courier. The building has a carrying amount of $400,000 (original cost $1,000,000). The lease requires North American to make payments of $88,492 to the insurance company each December 31. The building had a total original useful life of 30 years with no residual value and is being depreciated on a straight-line basis. The lease has an implicit rate of 12%. Note: ordinary annuity of $1 : n=10, I=12% =5.65022 1. Prepare the appropriate entries for North American (a) on January 1, 2021, to record the transaction and (b) on December 31, 2021, to record necessary adjustments

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