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In: AccountingExercise 21A-6 a-bTeal Mountain Leasing Company signs a lease agreement on January1, 2017, to...Exercise 21A-6 a-bTeal Mountain Leasing Company signs a lease agreement on January1, 2017, to lease electronic equipment to Sandhill Company. Theterm of the non-cancelable lease is 2 years, and payments arerequired at the end of each year. The following information relatesto this agreement:1.Sandhill has the option to purchase the equipment for $25,000upon termination of the lease. It is not reasonably certain thatSandhill will exercise this option.2.The equipment has a cost of $300,000 and fair value of $349,000to Teal Mountain Leasing. The useful economic life is 2 years, witha residual value of $25,000.3.Teal Mountain Leasing desires to earn a return of 5% on itsinvestment.4. Collectibility of the payments by Teal Mountain Leasing isprobable.Prepare the journal entries on the books of Teal MountainLeasing to reflect the payments received under the lease and torecognize income for the years 2017 and 2018. (Creditaccount titles are automatically indented when amount is entered.Do not indent manually. For calculation purposes, use 5 decimalplaces as displayed in the factor table provided and round finalanswers to 0 decimal places, e.g. 5,275.)Assuming that Sandhill exercises its option to purchase theequipment on December 31, 2018, prepare the journal entry to recordthe sale on Teal Mountain Leasing’s books. (Creditaccount titles are automatically indented when amount is entered.Do not indent manually.)