Unformatted text preview: be exchanged, and the manner and terms of settlement. 3. Mayer Company leased equipment from Lennon Company on July 1, 2008, for an eight-year period expiring June 30, 2016. Equal annual payments under the lease are $300,000 and are due on July 1 of each year. The first payment was made on July 1, 2008. The rate of interest contemplated by Mayer and Lennon is 8%. The cash selling price of the equipment is $1,861,875 and the cost of the equipment on Lennon's accounting records was $1,650,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Lennon, what is the amount of profit on the sale and the interest income that Lennon would record for the year ended December 31, 2008? $0 and $0 $0 and $62,475 $211,875 and $62,475 $211,875 and $74,475...
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- Spring '10
- Lennon, cash selling price, Accounting/Business Analysis/Financial Reporting