1. A company signs a lease acquiring the right to use property for five years. Lease payments of $26423.23 are to be made annually at the end of this year and the next four years. The discount, or interest, rate is 8 percent per year. (Use factor table in Appendix B for calculation)

a) what is the present value of the lease payments? $

b) in the first payment, what is the amount of interest cancelled? $

c) in the second payment, what is the amount of lease paud net of interest? $

d) in the last payment, what is the amount of interest cancelled? $

e) Assume the lease contract has the option to buy the property for the present value of the remaining payments plus $50,000. If the company decides to buy the property at the end of the third year immediately before the third payment, how much it must pay in dollars at the end of period 3? $

2. Box Office Corporation sells tickets for cabaret shows, Broadway shows, concerts and other live performances in Toronto. It packages tickets into a season pass good for ten events and customers can select from various theme packages. Each pass costs From $800 to $2,000 depending on seat selection. The average pass cost in the year was $1,760.

Box Office sold 575 passes this year. At the end of the year the passes not redeemed (used) are expired and deemed forfeited. Once the season is over all passes expire and cannot be used to grant access to venues.

a) Assume there were no other transactions in the year and that 90% of passes have been redeemed, how much is the accrued liability just before doing the AJE of end of the season? $

b) Assume there were no other transactions in the year and that 96% of passes have been redeemed, how much is the balance of Advances from Customers just before doing the AJE of end of the season? $

c) Assume there were no other transactions in the year and that 92% of passes have been redeemed, how much is the revenue for the season reported in the Income Statement? $