1) On January 1, Ramirez Supply leased a car for a four-year period, at which time possession of the car will revert back to the lessor. Annual lease payments are $20,000 due on December 31 of each year, calculated by the lessor using a 5% discount rate. Negotiations led to Ramirez guaranteeing the lessor a $72,000 residual value at the end of the lease term although Ramirez estimates that the residual value after four years will be $70,000. What is the amount to be added to the right-of-use asset and lease payable under the residual value guarantee? (Round your answer to the nearest whole dollar amount.) The present value of $1: n=4, i=5% is 0.82270. The present value of an ordinary annuity of $1: n=4, i=5% is 3.54595. The present value of an annuity due of $1: n=4, i=5% is 3.72325.

a. $823

b. $1,216

c. $1,645

d. $2,061

2) Which of the following statements characterizes a sale-leaseback arrangement?

a. The lessee also is the seller.

b. The lessor treats the lease as an operating lease.

c. The lessee buys the asset from a third party.

d. The lessor's interest rate always is higher than in a finance lease.