Record eleanors year-end adjusting entry

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Reference no: EM133434354

Eleanor Co. leased its manufactured equipment to Avery Inc. for a 4-year term. Eleanor Co. reported a book value of $165,000 for the equipment in its inventory account. The lease commenced on January 1, 2023, with the first annual payment of $55,500 due immediately and the rest of the payments due on January 1 for each of the subsequent years. The equipment has a useful life of 4 years, an estimated fair value of $206,640 at lease inception, and no residual or salvage value. The implicit rate of the lease is 5% and collectability of the lease payments from Avery is probable.

Required: Answer in Excel

a. Briefly explain what type of lease this is for the lessor and how you determined the lease type.

b. Record Eleanor's journal entries in proper form at the commencement of the lease.

c. Record Eleanor's year-end adjusting entry for the lease on December 31, 2023.

d. Indicate clearly what Eleanor would report for the lease on the income statement for the year ended December 31, 2023.

e. Indicate clearly what Eleanor would report for the lease on the balance sheet as of December 31, 2023.

Reference no: EM133434354

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