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Mid-South Auto Leasing leases vehicles to consumers. The attraction to customers is that the company can offer competitive prices due to volume buying. On September 30,2024 , the company leased a delivery truck to a local florist. Anything Grows. - The fiscal year for both companies ends December 31. - The lease agreement specified quarterly payments of $3,650 beginning September 30,2024 , the beginning of the lease, and each quarter (December 31, March 31, and June 30) through June 30, 2027 (three-year lease term) - The florist had the option to purchase the truck on September 29,2026 , for $7,300 when it was expected to have a residual value of $11,950. - The estimated useful life of the truck is four years. - Mid-South Auto Leasing's quarterly interest rate for determining payments was 2% (approximately 8% annually) Mid South paid $30,460 for the truek. - Both companies use straight-line depreciation or amortization - Anything Grows' incremental interest rate is 8%. Hint: A lease term ends for accounting purposes when an option becomes exercisable if it's expected to be exercised (Le., a BPO): Note: Use tables, Excel, or a financial calculator. (EV of S1, PV of S1. EVA of S1, PVA of S1. FVAD of S1 and PVAD of S1) Requlred: 1. Calculate the amount of selling profit that Mid-South would recognize in this 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 annuity due.) 2. Prepare the appropriate entries for Anything Grows and Mid-South on September 30, 2024 3. Prepare an amortization schedule(s) describing the pattern of interest expense for Anything Grows and interest revenue for MidSouth Auto Leasing over the lease term. 4. Prepare the appropriate entries for Amything Grows and Mod-South Auto Leasing on December 31, 2024. 5. Prepare the appropriate entries for Anytwing Grows and Mid-South on September 29, 2026, assuming the purchase option was exercised on that date. Journal entry worksheet Record the beginning of the lease for Anything Grows. Note: Enter debits before credits. Journal entry worksheet Record the cash payment for Anything Grows. Note: Cnine debats before credits. Journal entry worksheet Record the beginning of the lease for Mid-South Auto Leasing. Note: Enter debits before credits. Journal entry worksheet Record the cash received by Mid-South. Noten: Enter debits before credits. Prepare an amortization schedule(s) describing the pattem of interest expense for Anything Grows and interest reven Mid-South Auto Leasing over the lease term. Note: Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values
