On January 1, 2001, Wishful Thinking, a Lessor, Entered into a Direct-Financing

On January 1, 2001, Wishful Thinking, a lessor, entered into a direct-financing lease agreement with Lennard Company. The lease agreement required 6 equal annual payments of $50,000 at the end of each year. The leased property had an estimated residual value of $14,000, which was guaranteed by an unrelated third party. Wishful Thinking desired a 10% rate of return. What was the amount that Wishful Thinking recorded as interest revenue on the lease at the end of the year 2002?

A) $24,744.20
B) $19,823.22
C) $25,225.80
D) $26,750

Correct Answer:

Verified

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