Lamont Company Leases Computers for a Three-Year Term, at the End

question 103

Essay

Lamont Company leases computers for a three-year term, at the end of which they are regarded as
obsolete with no residual value because Lamont donates them to schools.Rents are collected at the end of each six-month period; the leases qualify as direct financing leases to Lamont (lessor).The computers cost Lamont $20,000 each.Lamont bases the rents on a 16% annual rate.
(a)The semi-annual rental on one computer, rounded to the nearest dollar, is $ _.
(b)Complete the following amortization schedule for the lease of one computer. (c)Give the entries that should be made by the lessor on the following dates:
(1)At the date the lease is signed:
(2)At the date of collection of the first rental payment:
(d)Show the lessor's income statement and balance sheet amounts with respect to the lease immediately after the first rental collection:

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Definitions:

Levator Scapulae

A muscle located in the back and neck that functions to elevate the scapula (shoulder blade).

Scapula

Bone forming the shoulder blade.

Pectoralis Minor

A thin, triangular muscle located beneath the pectoralis major in the chest, contributing to movements of the shoulder.

Rhomboideus Major

A skeletal muscle on the back that connects the spine to the scapula, playing a key role in retracting and stabilizing the shoulder.