On October 1,2014,Kelly Company Leased a Boat from Grant Company $\quad$

On October 1,2014,Kelly Company leased a boat from Grant Company.The lease is noncancelable and requires five equal annual payments of $50,000 each.The lease payments are due each October 1,beginning October 1,2014.The boat is recorded on Grant's books at $180,000,but its fair value is $207,542.Grant expects that the boat's residual value at the end of the lease term will be $10,000,but it is not guaranteed by Kelly.However,Kelly has an option to purchase the boat for $10,000 at the end of the lease term.At the inception of the lease,the boat has a remaining economic life of six years with a $2,500 estimated salvage value at the end of its life.Both firms use the straight-line method of depreciation and have December 31 year-ends for financial reporting purposes.The interest rate used by Grant Company to calculate the annual lease payment is 12%,and known by Kelly.Collection of the lease payments is reasonably predictable by Grant.
Required:
1.Complete the following table for Grant's and Kelly's December 31,2014 income statements:
Sales $\quad$$\quad$$\quad$$\quad$$\quad$ Grant (Lessor) $\quad$$\quad$ Kelly (Lessee)
Interest income
Rent revenue
Cost of goods sold
Depreciation expense
Rent expense
Interest expense
Be sure to show and clearly label all calculations.