Bonita Corporation manufactures replicators. On January 1, 2017, it
leased to Althaus Company a replicator that had cost $111,900 to manufacture. The lease agreement covers the 5-year useful life of the replicator and requires 5 equal annual rentals of $44,900 payable each January 1, beginning January 1, 2017. An interest rate of 11% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs.
Prepare Bonita’s January 1, 2017, journal entries
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