Sandhill Leasing Company signs a lease agreement on January 1,2017, to lease electronic equipment to Teal Company. The term ofthe noncancelable lease is 2 years, and payments are required atthe end of each year. The following information relates to thisagreement:
| 1. | | Teal Company has the option to purchase the equipment for$17,000 upon termination of the lease. |
| 2. | | The equipment has a cost and fair value of $176,000 to SandhillLeasing Company. The useful economic life is 2 years, with asalvage value of $17,000. |
| 3. | | Teal Company is required to pay $4,800 each year to the lessorfor executory costs. |
| 4. | | Sandhill Leasing Company desires to earn a return of 10% on itsinvestment. |
| 5. | | Collectibility of the payments is reasonably predictable, andthere are no important uncertainties surrounding the costs yet tobe incurred by the lessor. |
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(a) Prepare the journal entries on the books ofSandhill Leasing to reflect the payments received under the leaseand to recognize income for the years 2017 and 2018.(Credit account titles are automatically indented whenamount is entered. Do not indent manually. If no entry is required,select "No Entry" for the account titles and enter 0 for theamounts. Round present value factor calculations to 5 decimalplaces, e.g. 0.527552 and the final answers to 0 decimalplaces)
| Date | Account Titles | Debit | Credit |
| 1/1/17 | Lease Receivable | 176,000 | |
| Equipmet | | 176,000 |
| 12/31/17 | Cash | ?? | |
| Executory Costs Payable | | 4,800 |
| Lease Receivable | | ??? |
| Interest Revenue | | 17,600 |
| 12/31/18 | Cash | ?? | |
| Executory Costs Payable | | 4,800 |
| Lease Receivable | | ??? |
| Interest Revenue | | ??? |
I'm only stuck where the question marks are. Both the Cashshould be the same $ amount.
