Teal Mountain Leasing Company signs a lease agreement on January to lease electronic equipment to Sandhill Company. The term of the noncancelable lease is years, and payments are required at the end of each year. The following information relates to this agreement.
Sandhill has the option to purchase the equipment for $ upon termination of the lease. It is not reasonably certain that Sandhill will exercise this option.
The equipment has a cost of $ and fair value of $ to Teal Mountain Leasing. The useful economic life is years, with a residual value of $
Teal Mountain Leasing desires to earn a return of on its investment.
Collectibility of the payments by Teal Mountain Leasing is probable.
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Prepare the journal entries on the books of Teal Mountain Leasing to record the payments received under the lease and to recognize income for the years and List all debit entries before credit entries. Credit account titles are automatically
