6 Mid-South Auto Leasing leases vehicles to consumers. The attraction to customers is that the company can offer competitive prices due to volume buying and requires an Interest rate Implicit In the lease that is one percent below alternate methods of financing. On September 30, 2018, the company leased a delivery truck to a local florist, Anything Grows. points eBook Print References The lease agreement specified quarterly payments of $7,000 beginning September 30, 2018, the beginning of the lease, and each quarter (December 31, March 31, and June 30) through June 30, 2021 (three-year lease term). The florist had the option to purchase the truck on September 29, 2020, for $14,000 when It was expected to have a residual value of $14,000. The estimated useful life of the truck is four years. Mid-South Auto Leasing's quarterly interest rate for determining payments was 3% (approximately 12% annually). Mid-South pald $56,000 for the truck. Both companles use stralght-line depreclation or amortization. Anything Grows' Incremental Interest rate is 12%. Hint: A lease term ends for accounting purposes when an option becomes exercisable if It's expected to be exercised (L.e., a BPO). (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1 (Use approprlate factor(s) from the tables provided.) Requlred 1. Calculate the amount of selling profit that Mid-South would recognize In thls sales-type lease. (Be careful to note that, although payments occur on the last calendar day of each quarter, since the first payment was at the beginning of the lease, payments represent an annulty due.) 2. Prepare the approprlate entries for Anything Grows and Mid-South on September 30, 2018. 3. Prepare an amortization schedule(s) describing the pattern of Interest expense for Anything Grows and Interest revenue for Mid- South Auto Leasing over the lease term. 4. Prepare the approprlate entries for Anything Grows and Mid-South Auto Leasing on December 31, 2018. 5. Prepare the approprlate entries for Anything Grows and Mid-South on September 29, 2020, assuming the purchase option was exercised on that date Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4Required 5