1.On December 31, 2021, Sheridan Corporation leased a ship from Fort Company for an eight-year period expiring December 30, 2029. Equal annual payments of $480000 are due on December 31 of each year, beginning with December 31, 2021. The lease is properly classified as a finance lease on Sheridans books. The present value at December 31, 2021 of the eight lease payments over the lease term discounted at 9% is $2895816. Assuming all payments are made on time, the amount that should be reported by Sheridan Corporation as the total liability for finance leases on its December 31, 2022 balance sheet is

A. $2415816

B $2880000

C. $2895816

D. 2153239

2. On January 1, 2021, Crane Corporation signed a 5-year noncancelable lease for equipment. The terms of the lease called for Crane to make annual payments of $199000 at the beginning of each year for 5 years beginning on January 1, 2021 with the title passing to Crane at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Crane uses the straight-line method of depreciation for all of its fixed assets. Crane accordingly accounts for this lease transaction as a finance lease. The lease payments were determined to have a present value of $843704 at an effective interest rate of 9%. In 2021, Crane should record interest expense of

A. $58023

B. $123067

C. $140977

D. $75933