1)

On Jan. 1, 2020, Schrute Company leases an automobile with a fair value of $17,000 from Rainn, Inc., on the following terms: 1. Non-cancelable term of 40 months. 2. Rental of $445 per month (at the beginning of each month, first payment on 1/1/2020). 3. Schrute guarantees a residual value of $1,800 (the present value at 0.5% per month is $1,403). The expected residual value is estimated to be $1,800 at the end of the lease term. 4. Estimated economic life of the automobile is 50 months. 5. Schrutes incremental borrowing rate is 6% a year (0.5% a month). Rainn's implicit rate is unknown. Present Value of an Annuity Due with 6% and 50 periods: 16.70757 Present Value of an Annuity Due with 6% and 40 periods: 15.94907 Present Value of an Annuity Due with 0.5% and 50 periods: 44.36350 Present Value of an Annuity Due with 0.5% and 40 periods: 36.35309 The journal entry to record the monthly lease payment and the interest expense (combined in one entry) for Feb. 1, 2020 includes a debit to lease liability for?

options: a) $348 b) $411 c) $366 d) $0

2)

Schrute Company leases an automobile with a fair value of $15,005 from Rainn, Inc., on the following terms:

1.		Non-cancelable term of 50 months.
2.		Rental of $300 per month (at the beginning of each month).
3.		Schrute guarantees a residual value of $1,800 (the present value at 0.5% per month is $1,403). The expected residual value is estimated to be $1,800 at the end of the lease term.
4.		Estimated economic life of the automobile is 60 months.
5.		Schrutes incremental borrowing rate is 6% a year (0.5% a month). Rainns implicit rate is unknown.

Present Value of an Annuity Due with 0.5% and 60 periods: 51.98419

Present Value of an Ordinary Annuity at 0.5% and 60 periods: 48.17337352

Present Value of an Annuity Due with 0.5% and 50 periods: 44.36350

Present Value of an Ordinary Annuity with 0.5% and 50 Periods:41.56644707

The entry to record the first months lease payment (at commencement of the lease) would include:

a)	a debit to interest expense in the amount of $300.

b)	a credit to lease liability in the amount of $300.

c)	a debit to the cash account in the amount of $300.

d)	a debit to the lease liability account in the amount of $300.