Crane Corporation enters into a 5-year lease of equipment on December 31, 2024, which requires 5 annual payments of
$43,200 each, beginning December 31, 2024. In addition, Crane guarantees the lessor a residual value of $18,000 at the end of the
lease. However, Crane believes it is probable that the expected residual value at the end of the lease term will be $8,000. The
equipment has a useful life of 5 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and
the carrying amount of the equipment is $150,000.
Prepare Lost Ark's 2024 and 2025 journal entries, assuming the implicit rate of the lease is 9% and this is known to Crane. (Record
journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent
manually. If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.
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.)
Click here to view factor tables.
Date
Account Titles and Explanation
(To record the lease)
(To record receipt of lease payment)
Debit
Cre
