Ambrose Co. has the option of purchasing a new delivery truck for $20,000 in cash or leasing the truck for $4,326 per year, payable at the end of each year for six years. The truck also has a useful life of six years and will be depreciated on a straight-line basis with no salvage value. The interest rate used by the lessor to determine the annual payments was 8%. See Table 6-5 (Use the appropriate factor by clicking on the Table link.) Required: a. Assume that Ambrose Co. purchased the delivery truck and signed a six-year, 8% note payable for $20,000 in satisfaction of the purchase price. Prepare the horizontal model and the journal entry that Ambrose should make to record the purchase transaction. b. Assume instead that Ambrose Co. agreed to the terms of the lease. Prepare the horizontal model and the journal entry that Ambrose should make to record the capital lease transaction. (Hint: First determine the present value of future lease payments.) c. Prepare the horizontal model and record the journal entry that Ambrose Co. should make at the end of the year to record the first annual lease payment of $4,326. Indicate the financial statement effect. (Hint. Based on your answer to part b, determine the appropriate amounts for interest and principal.) d. What expenses (include amounts) should Ambrose Co. recognize on the income statement for the first year of the lease? e. How much would the annual payments be for the note payable signed by Ambrose Co. Required A1? (Hint. Use the link for present value Table 6-5.) Answer is not complete. Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Answer is not complete. Required A1 Required A2 Required B1 Required B2 Required C1 Required C2 Required D Required E Assume instead that Ambrose Co. agreed to the terms of the lease. Prepare the horizontal model that Ambrose should make to record the capita amounts with + for increases and amounts with - for decreases. Do not round intermediate calculations. Round your final answers to the neares Balance Sheet Assets Liabilities Prepaid expense 3,980 = Lease liability 4,326x + Stockholders' Equity Net Income < Required A2 Required B2 > Answer is not complete. Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Required C1 Required C2 Required D Required E Assume instead that Ambrose Co. agreed to the terms of the lease. Record the journal entry that Ambrose should make to record the capital lease transaction. (Hint: First determine the present value of future lease payments.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) 1 No Event General Journal 1 Interest expense Lease liability Cash < Required B1 Required C1 > Debit Credit 346 3,980 4,326 Complete this question by entering your answers in the tabs below. Answer is not complete. Required A1 Required A2 Required B1 Required B2 Required C1 Required C2 Required D Required E Prepare the horizontal model that Ambrose Co. should make at the end of the year to record the first annual lease payment of $4,326. Indicate amounts for interest and principal.) (Enter decreases with a minus sign to indicate a negative financial statement effect. Do not round intermedi Assets = Balance Sheet Liabilities Stockholders' Equity + Net Income < Required B2 Required C2 > Answer is not complete. Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Required C1 Required C2 Required D Required E Record the journal entry that Ambrose Co. should make at the end of the year to record the first annual lease payment of $4,326. (Hint: Based on your answer to part b, determine the appropriate amounts for interest and principal.) Indicate the financial statement effect. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) No Event General Journal Debit < Required C1 Required D > Credit Answer is not complete. Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Required C1 Required C2 Required D Required E What expenses (include amounts) should Ambrose Co. recognize on the income statement for the first year of the lease? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) Income statement (Partial) < Required C2 Required E > value Table 6-5.) Answer is not complete. Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Required C1 Required C2 Required D Required E How much would the annual payments be for the note payable signed by Ambrose Co. in Required A1? (Hint: Use the link for present value Table 6-5.) (Round your answer to 2 decimal places.) Annual payments < Required D Required E > Discount Rate No. of Periods 2% 6% 8% 10% 12% 14% 16% 18% 20% 12345 0.980 0.9615 0.9434 0.9259 1.942 1.8861 1.8334 1.7833 2.884 2.7751 2.6730 2.5771 3.808 3.6299 3.4651 4.713 4.4518 4.2124 0.9091 0.8929 0.8772 0.8621 1.7355 1.6901 1.6467 1.6052 2.4869 2.4018 2.3216 3.3121 3.1699 3.0373 2.9137 0.8475 0.8333 1.5656 1.5278 2.2459 2.1743 2.1065 2.7982 2.6901 2.5887 3.9927 3.7908 3.6048 3.4331 3.2743 3.1272 2.9906 6 5.601 5.2421 4.9173 4.6229 4.3553 4.1114 3.8887 3.6847 3.4976 3.3255 7 6.472 6.0021 5.5824 5.2064 4.8684 4.5638 4.2883 8 7.325 6.7327 6.2098 5.7466 5.3349 4.9676 4.6389 9 8.162 7.4353 6.8017 6.2469 5.7590 5.3282 4.9464 10 8.983 8.1109 7.3601 6.7101 6.1446 5.6502 5.2161 4.0386 3.8115 3.6046 4.3436 4.0776 3.8372 4.6065 4.3030 4.0310 4.8332 4.4941 4.1925 11 9.787 8.7605 7.8869 7.1390 6.4951 5.9377 5.4527 12 10.575 9.3851 8.3838 7.5361 6.8137 6.1944 5.6603 13 11.348 9.9856 8.8527 7.9038 7.1034 6.4235 14 12.106 10.5631 9.2950 8.2442 7.3667 6.6282 15 12.849 11.1184 9.7122 8.5595 7.6061 6.8109 5.0286 4.6560 4.3271 5.1971 4.7932 4.4392 5.8424 5.3423 4.9095 4.5327 6.0021 5.4675 5.0081 4.6106 6.1422 5.5755 5.0916 4.6755 16 13.578 11.6523 10.1059 8.8514 7.8237 6.9740 6.2651 5.6685 5.1624 4.7296 17 14.292 12.1657 10.4773 9.1216 8.0216 7.1196 6.3729 5.7487 5.2223 4.7746 18 14.992 12.6593 10.8276 9.3719 8.2014 7.2497 6.4674 5.8178 5.2732 4.8122 19 15.678 13.1339 11.1581 9.6036 8.3649 7.3658 6.5504 5.8775 5.3162 4.8435 20 16.351 13.5903 11.4699 9.8181 8.5136 7.4694 6.6231 5.9288 5.3527 4.8696 21 17.011 14.0292 11.7641 10.0168 8.6487 7.5620 6.6870 22 17.658 14.4511 12.0416 10.2007 8.7715 7.6446 6.7429 23 18.292 14.8568 12.3034 10.3711 8.8832 7.7184 6.7921 6.0442 5.9731 6.0113 5.4099 5.4321 5.3837 4.8913 4.9094 4.9245 24 18.914 15.2470 12.5504 10.5288 8.9847 7.7843 6.8351 6.0726 5.4509 4.9371 25 19.523 15.6221 12.7834 10.6748 9.0770 7.8431 6.8729 6.0971 5.4669 4.9476 30 22.396 17.2920 13.7648 11.2578 9.4269 8.0552 7.0027 6.1772 5.5168 4.9789 35 24.999 18.6646 14.4982 11.6546 9.6442 8.1755 7.0700 6.2153 5.5386 4.9915 40 27.355 19.7928 15.0463 11.9246 9.7791 8.2438 7.1050 6.2335 5.5482 4.9966 45 29.490 20.7200 15.4558 12.1084 9.8628 8.2825 7.1232 6.2421 5.5523 4.9986 50 31.424 21.4822 15.7619 12.2335 9.9148 8.3045 7.1327 6.2463 5.5541 4.9995