Ambrose Co. has the option of purchasing a new delivery truck for $20,000 in cash or leasing the truck for $4,592 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 10%

--Assume that Ambrose Co. purchased the delivery truck and signed a six-year, 10% note payable for $20,000 in satisfaction of the purchase price. Prepare the horizontal model that Ambrose should make to record the purchase transaction (Enter decreases to account balances with a minus sign.). Figure each of the items in the balance sheet and income statement.

Balance Sheet: Assets=Liabilities+Stockholders Equity

Income Statement: Net income = Revenue-Expenses

--Assume instead that Ambrose Co. agreed to the terms of the lease. Prepare the horizontal modelthat Ambrose should make to record the capital lease transaction. (+ for increase and for decrease). (Hint: First determine the present value of future lease payments)

Figure each of the items in the balance sheet and income statement.

Balance Sheet: Assets=Liabilities+Stockholders Equity

Income Statement: Net income = Revenue-Expenses

--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.)

Record the capital lease transaction at the present value of lease payments. (accounts and amounts)

--Prepare the horizontal model that Ambrose Co. should make at the end of the year to record the first annual lease payment of $4,592 (+ for increase and for decrease). (Hint: Based on your answer above, determine the appropriate amounts for interest and principal.)

Figure each of the items in the balance sheet and income statement.

Balance Sheet: Assets=Liabilities+Stockholders Equity

Income Statement: Net income = Revenue-Expenses

--Record the journal entry that Ambrose Co. should make at the end of the year to record the first annual lease payment of $4,592. (Hint: Based on your answer to part b, determine the appropriate amounts for interest and principal.)

Record the first annual lease payment on a capital lease. (Accounts and Amounts)

--What expenses (include amounts) should Ambrose Co. recognize on the income statement for the first year of the lease?

--How much would the annual payments be for the note payable signed by Ambrose Co.?