Maris Co. purchased a machine on January 1, 2011, for $2,400,000 for the express purpose of leasing it. The machine is expected to have a five-year life, no salvage value, and be depreciated on a straight line basis.
On March 1, 2011, Maris Co. leased the machine to Delia Co. for $600,000 a year for four years ending February 28, 2015.
Maris Co. incurred total maintenance and other related costs under the provisions of the lease of $30,000 relating to the year ended December 31, 2011.
Delia Co. paid $600,000 to Maris Co. on March 1, 2011.
REQUIRED:
Prepare journal entries on the books of Maris Co. and Delia Co. using the OPERATING LEASE concept.