(This problem requires use of PV tables with an 11% rate, a financial calculator or the formulas.)
Taquito Company leased equipment to Baja Company on January 1, 2014. The lease was for five years and required annual payments of $24,500 on January 1 of each year with the first payment due January 1, 2014. The equipment had a cost to Taquito of $85,000 and no expected residual value at the end of the lease term. The lease was appropriately accounted for as a sales-type lease by Taquito. Taquito used a 11% rate of return to establish the lease payments.
Required: Required:
a.Prepare all 2014 journal entries for Taquito related to the lease.
b.What amount of interest revenue would Taquito recognize for the year ended December 31, 2015?

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The Answer of (This problem requires use of PV tables with an 11% rate, a financial calculator or the formulas.)
Taquito Company leased equipment to Baja Company on January 1, 2014. The lease was for five years and required annual payments of $24,500 on January 1 of each year with the first payment due January 1, 2014. The equipment had a cost to Taquito of $85,000 and no expected residual value at the end of the lease term. The lease was appropriately accounted for as a sales-type lease by Taquito. Taquito used a 11% rate of return to establish the lease payments.
Required: Required:
a.Prepare all 2014 journal entries for Taquito related to the lease.
b.What amount of interest revenue would Taquito recognize for the year ended December 31, 2015?

(This Problem Requires Use of PV Tables with an 11