9 5 Check my work DIUNCI LCunny pulliusCu u snyrc-tuynie PIUTTE IVI Pucu,uvu unu icusCu IL LU ICU DUIUITynny LIUW TUI ILS U vuluc vi $971,074 on January 1, 2021. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 2.5 points Terms of the lease agreement and related facts were: a. Eight annual payments of $170,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 through 2027. Red Baron knows that Bidwell Leasing's implicit interest rate was 11%. The estimated useful life of the plane is eight years. Payments were calculated as follows: eBook Print Amount to be recovered (fair value) Lease payments at the beginning of each of the next eight years: ($971, 074 + 5.7122*) $971, 074 $ 170,000 * Present value of an annuity due of $1: n = 8, i = 11% b. Red Baron's incremental borrowing rate is 12%. c. Incremental costs of consummating the completed lease transaction incurred by Bidwell Leasing were $26,557. Required: 1. How should this lease be classified (a) by Bidwell Leasing the lessor) and (b) by Red Baron (the lessee)? 2. Prepare the appropriate entries for both Red Baron Flying Club and Bidwell Leasing on January 1, 2021. 3. Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club 4. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2021 (the second lease payment). Both companies use straight-line depreciation. 5. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2027 (the final lease payment). Required 1 Required 2 Required 3 Required 4 Required 5 Prepare the appropriate entries for both Red Baron Flying Club and Bidwell Leasing on January 1, 2021. (If no entry is required for transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to neares whole dollar.) View transaction list Journal entry worksheet Record the beginning of the lease for Red Baron Flying Club. Note: Enter debits before credits. General Journal Debit Credit Date January 01, 2021 Required 1 Required 2 Required 3 Required 4 Required 5 Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club. (Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.) Lease Amortization Schedule Payments Effective Decrease Interest in Balance Date Outstanding Balance 1/1/21 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27 0 $ 0 0 Required 1 Required 2 Required 3 Required 4 Required 5 Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2021 (the second lease payment). Both companies use straight-line depreciation. (If no entry is required for a transaction/event, select "No journal entry required" in the f account field. Round your intermediate and final answers to nearest whole dollar.) View transaction list Journal entry worksheet 1 2 2 3 > Record the lease payment for Red Baron Flying Club. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2021 Required 1 Required 2 Required 3 Required 4 Required 5 Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2027 (the final lease payment). (If no e required for a transaction/event, select "No journal entry required in the first account field. Round your intermediate and final an to nearest whole dollar.) View transaction list Journal entry worksheet 1 2 3 > Record the lease payment for Red Baron Flying Club. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2027 9 5 Check my work DIUNCI LCunny pulliusCu u snyrc-tuynie PIUTTE IVI Pucu,uvu unu icusCu IL LU ICU DUIUITynny LIUW TUI ILS U vuluc vi $971,074 on January 1, 2021. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 2.5 points Terms of the lease agreement and related facts were: a. Eight annual payments of $170,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 through 2027. Red Baron knows that Bidwell Leasing's implicit interest rate was 11%. The estimated useful life of the plane is eight years. Payments were calculated as follows: eBook Print Amount to be recovered (fair value) Lease payments at the beginning of each of the next eight years: ($971, 074 + 5.7122*) $971, 074 $ 170,000 * Present value of an annuity due of $1: n = 8, i = 11% b. Red Baron's incremental borrowing rate is 12%. c. Incremental costs of consummating the completed lease transaction incurred by Bidwell Leasing were $26,557. Required: 1. How should this lease be classified (a) by Bidwell Leasing the lessor) and (b) by Red Baron (the lessee)? 2. Prepare the appropriate entries for both Red Baron Flying Club and Bidwell Leasing on January 1, 2021. 3. Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club 4. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2021 (the second lease payment). Both companies use straight-line depreciation. 5. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2027 (the final lease payment). Required 1 Required 2 Required 3 Required 4 Required 5 Prepare the appropriate entries for both Red Baron Flying Club and Bidwell Leasing on January 1, 2021. (If no entry is required for transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to neares whole dollar.) View transaction list Journal entry worksheet Record the beginning of the lease for Red Baron Flying Club. Note: Enter debits before credits. General Journal Debit Credit Date January 01, 2021 Required 1 Required 2 Required 3 Required 4 Required 5 Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club. (Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.) Lease Amortization Schedule Payments Effective Decrease Interest in Balance Date Outstanding Balance 1/1/21 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27 0 $ 0 0 Required 1 Required 2 Required 3 Required 4 Required 5 Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2021 (the second lease payment). Both companies use straight-line depreciation. (If no entry is required for a transaction/event, select "No journal entry required" in the f account field. Round your intermediate and final answers to nearest whole dollar.) View transaction list Journal entry worksheet 1 2 2 3 > Record the lease payment for Red Baron Flying Club. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2021 Required 1 Required 2 Required 3 Required 4 Required 5 Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2027 (the final lease payment). (If no e required for a transaction/event, select "No journal entry required in the first account field. Round your intermediate and final an to nearest whole dollar.) View transaction list Journal entry worksheet 1 2 3 > Record the lease payment for Red Baron Flying Club. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2027