Blossom Corporation, which uses ASPE, manufactures replicators. On May 29, 2020, it leased to Waterway Limited a replica

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Blossom Corporation, which uses ASPE, manufactures
replicators. On May 29, 2020, it leased
to Waterway Limited a replicator that cost
$266,400 to manufacture and usually sells for $418,000. The
lease agreement covers the replicator’s 9-year useful life and
requires 9 equal annual rentals of $64,932 each,
beginning May 29, 2020. The equipment reverts
to Blossom at the end of the lease, at which time it is
expected that the replicator will have a residual value of $48,400,
which has been guaranteed by Waterway, the lessee. An interest
rate of 11% is implicit in the lease agreement. Collectibility
of the rentals is reasonably assured, and there are no important
uncertainties concerning costs.

Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY
DUE.

(b)

Prepare Blossom’s May 29, 2020 journal
entries. (Credit account titles are automatically
indented when the 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. Round factor values to 5 decimal
places, e.g. 1.25124 and final answers to 0 decimal places, e.g.
5,275.)
Date
Account Titles and Explanation
Debit
Credit
May 29
(To record inception of lease.)
May 29
(To record cost of goods sold.)
May 29
(Collection of first lease payment.)