七、Yu Ltd. lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Company records disclose the following. Inventory (beginning) $ 80,000 Sales $ 415,000 Purchases 290,000 Sales returns 21,000 Purchase returns 28,000 Gross profit % based on net selling price 35% Merchandise with a selling price of $30,000 remained undamaged after the fire, and damaged merchandise has a residual value of $8,150. The company does not carry fire insurance on its inventory. Instructions (6%) Please computing the fire loss incurred.

二、Cleveland Group leased a new crane to Abriendo Construction under a 5-year, non-cancelable contract starting January 1, 2019. Terms of the lease require payments of $48,555 each January 1, starting January 1, 2019. The crane has an estimated life of 7 years, a fair value of $240,000, and a cost to Cleveland of $240,000. The estimated fair value of the crane is expected to be $45,000 (unguaranteed) at the end of the lease term. No bargain purchase or renewal options are included in the contract, and it is not a specialized asset. Both Cleveland and Abriendo adjust and close books annually at December 31. Collectibility of the lease payments is probable. Abriendo’s incremental borrowing rate is 8%, and Cleveland’s implicit interest rate of 8% is known to Abriendo. Instructions (20%) a. Prepare all the entries related to the lease contract and leased asset for the year 2019 for the lessee and lessor, assuming Abriendo uses straight-line amortization for all similar leased assets, and Cleveland depreciates the asset on a straight-line basis with a residual value of $15,000. b. How should be presented in the statement of financial position, the income statement, and the related notes of both the lessee and the lessor at December 31, 2019.

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