On January 1, 2020, Monty Animation sold a truck to Peete Finance for $46,000 and...
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On January 1, 2020, Monty Animation sold a truck to Peete Finance for $46,000 and immediately leased it back. The truck was carried on Monty's books at $38,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Monty at lease-end. The lease requires 5 equal rental payments of $11,219 at the end of each year (first payment on January 1, 2021). The appropriate rate of interest is 7%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Monty's 2020 journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit 1/1/20 Cash 46000 46000 12/31/20
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