Bayou Inc.leases equipment to its customers under noncancelable leases.On January 1,2014,Bayou leased equipment costing $400,000 to Rockwell Co. ,for nine years.The rental cost was $44,000 payable in advance semiannually (January 1 and July 1),plus $2,000 semiannually for executory costs.The equipment had an estimated life of 15 years and sold for $533,025 with an estimated unguaranteed residual value of $80,000.The implicit interest rate is 12 percent.
Prepare all journal entries for 2014 on Bayou's and Rockwell's books.Round all calculations to the nearest dollar.Use straight-line depreciation.

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The Answer of Bayou Inc.leases equipment to its customers under noncancelable leases.On January 1,2014,Bayou leased equipment costing $400,000 to Rockwell Co. ,for nine years.The rental cost was $44,000 payable in advance semiannually (January 1 and July 1),plus $2,000 semiannually for executory costs.The equipment had an estimated life of 15 years and sold for $533,025 with an estimated unguaranteed residual value of $80,000.The implicit interest rate is 12 percent.
Prepare all journal entries for 2014 on Bayou's and Rockwell's books.Round all calculations to the nearest dollar.Use straight-line depreciation.

Bayou IncLeases Equipment to Its Customers Under Noncancelable Leases