Prepare sheridan corporation january journal entries

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Question - Sheridan Corporation, which uses ASPE, leased equipment it had manufactured at a cost of $148,500 for Coronado, the lessee. The equipment's regular selling price is $189,000. The term of the lease is 5 years, beginning January 1, 2020, with equal rental payments of $43,080 at the beginning of each year. Coronado pays all executory costs directly to third parties. The equipment's fair value at the lease's inception is $189,000. The equipment has a useful life of seven years with no residual value. The lease has an implicit interest rate of 7%, no bargain purchase option, and no transfer of title. Collectability is reasonably assured, with no additional costs to be incurred by Sheridan.

Required - Prepare Sheridan Corporation's January 1, 2020 journal entries at the inception of the lease and the entry at December 31, 2020, to record interest.

Reference no: EM133170907

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