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We assume that the lease is appropriately recorded as a sales-type lease by Harter. Harter...

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Accounting

We assume that the lease is appropriately recorded as a sales-type lease by Harter.

Harter Company leased machinery to Stine Company on Jan 1, 2018, for a ten-year period expiring Jan 1, 2028. Equal annual payments under the lease are $250,000 and are due on Jan 1 of each year. The first payment was made on Jan 1, 2018. The rate of interest used by Harter and Stine is 9%. The lease receivable before the first payment is $1,750,000 and the cost of the machinery on Harter's accounting records was $1,550,000.

What is the entry at December 31, 2018?

options:

Depreciation expense 175,000

Leased asset 175,000

Cash 250,000

Lease receivable 250,000

Lease receivable 135,000

Interest revenue 135,000

a and c

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