Glaus Company agrees to lease machinery from Jensen Corporation on January 1, 2014 under a non-cancellable contract. The following information relates to the lease agreement: The term of the lease is 4 years with bargain purchase option, and the machinery has an estimated economic life of 5 years. The equal rental payment has been set as $26,720 to be paid at the beginning of each year. > The cost and fair value of the computer was $90,000 & $100,000 respectively and the amount of the guaranteed residual value is $10,000. Glaus Company has an incremental borrowing rate of 12% but has no knowledge that Jensen Corporation used a rate 10% in setting annual rentals. Collection of the rentals is reasonably predictable and there are no important uncertainties regarding future un-reimbursable costs to be incurred by the lessor. At the end of the lease term the computer was purchased by the lessee at a price of Tk. 15,000. ? PVIFAD (10%,4) - 3.48685; PVIF (10%,4) - 0.68301; PVIFAD (12%,4) - 3.40183; PVIF (12%,4) - 0.63552 Instructions: Record the necessary journal entries in the books of Jensen Corporation.

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