Leasing has become the number one method of external financing by U.S. companies. Reasons include each of the following except:

S Corporation has a rate of return on assets of 10% and a debt/equity ratio of 2 to 1. The immediate impact of recording a finance lease on these ratios is a(n):

	Return on Assets	Debt/Equity
a.	increase	increase
b.	decrease	decrease
c.	increase	decrease
d.	decrease	increase

Technoid Incorporated sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2024. The manufacturing cost of the computers was $18 million.

This noncancelable lease had the following terms:

Lease payments: $2,713,429 semiannually; first payment on January 1, 2024; remaining payments on June 30 and December 31 each year through June 30, 2028.
Lease term: 5 years (10 semiannual payments).
No residual value; no purchase option.
Economic life of equipment: 5 years.
Implicit interest rate and lessee’s incremental borrowing rate: 5% semiannually.
Fair value of the computers on January 1, 2024: $22 million.

What is the interest revenue that Technoid would report for this lease in its income statement for the year ended December 31, 2024?

Note: Round your answer to the nearest whole dollar.

On December 31, 2024, Perry Corporation leased equipment to Admiral Company for a five-year period. The annual lease payment, excluding nonlease components, is $47,000. The interest rate for this lease is 13%. The payments are due on December 31 of each year. The first payment was made on December 31, 2024. The normal cash price for this type of equipment is $150,000 while the cost to Perry was $115,000. For the year ended December 31, 2024, by what amount will Perry’s earnings increase due to this lease (ignore taxes)?

On January 1, 2024, Robertson Construction leased several items of equipment under a two-year operating lease agreement from Jamison Leasing, which routinely finances equipment for other firms at an annual interest rate of 5%. The contract calls for four rent payments of $60,000 each, payable semiannually on June 30 and December 31 each year. The equipment was acquired by Jamison Leasing at a cost of $380,000 and was expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semi-annually.

Required:

Prepare the appropriate journal entries for the lessor (Jamison Leasing) from the beginning of the lease through the end of 2024.

Note: If no entry is required for a transaction/event, select “No journal entry required” in the first account field.