(Lessor Entries with Bargain-Purchase Option) A lease agreement between Lennox Leasing Company and Gill Company is described in E21-8.
(a) Compute the amount of the lease receivable at the inception of the lease.
(b) Prepare a lease amortization schedule for Lennox Leasing Company for the 5-year lease term.
(c) Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2012, 2013, and 2014. The lessor’s accounting period ends on December 31. Reversing entries are not used by Lennox.