What is the amount of residual value guaranteed by reagan

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Reference no: EM131779538

Question: On December 31, 2015, Reagan Inc. signed a lease for some equipment having a nine-year useful life with Silver Leasing Co. The lease payments are made by Reagan annually, beginning at signing date. Title does not transfer to the lessee, so the equipment will be returned to the lessor on December 31, 2021. There is no bargain purchase option, and Reagan guarantees a residual value to the lessor on termination of the lease.

Reagan's lease amortization schedule appears below:

Dec. 31	Payments	Interest	Decrease Balance	Balance
2015				$519,115
2015	$90,000		$90,000	429,115
2016	$90,000	$17,165	72,835	356,280
2017	$90,000	14,251	75,749	280,531
2018	$90,000	11,221	78,779	201,752
2019	$90,000	8,070	81,930	119,822
2020	$90,000	4,793	85,207	34,615
2021	$36,000	1,385	34,615	0

What is the amount of residual value guaranteed by Reagan to the lessor?

a. $34,615.

b. $1,385.

c. $36,000.

d. Cannot be determined from the given information.

Reference no: EM131779538

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