Bidwell Leasing purchased a single-engine plane for its fair value of $771,147 and leased it to Red Baron Flying Club 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.) Terms of the lease agreement and related facts were: a. Eight annual payments of $135,000 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: $771,147 Amount to be recovered (fair value) Lease payments at the beginning of each of the next eight years: ($771,147- 5.7122*) $ 135,000 *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 negotiating and consummating the completed lease transaction incurred by Bidwell Leasing were $21,091. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Determine the effective rate of interest for Bidwell Leasing for the purpose of recognizing interest revenue over the lease term. (Round your intermediate and final answers to nearest whole dollar.) Effective rate of interest 11 X % Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Prepare an amortization schedule that describes the pattern of interest revenue over the lease term for Bidwell Leasing. (Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.) Date 1/1/21 12/31/21 12/31/22 Lease Amortization Schedule Effective Decrease Payments Outstanding Interest in Balance Balance $ 771,147 X $ 135,000 $ 0$ 135,000 636,147 X 135,000 69,976 X 65,024 X 571,123 135,000 62,823 X 72,177 498,946 135,000 54,884 X 80,116 418,830 135,000 46,071 88,929 329,901 135,000 36,289 98,711 231,190 135,000 25,431 X 109,569 121,621 135,000 13,379 121,621 0 $ 1,080,000 $ 308,853 771,147 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 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 first account field. Round your intermediate and final answers to nearest whole dollar.) No Date General Journal Debit Credit 1 84,811 x December 31, 202 Interest expense Lease payable 50,189 X Cash 135,000 2. 96,393 December 31, 202 Depreciation Expense Accumulated depreciation 96,393 3 December 31, 202 Cash 135,000 Lease receivable 77,747 X 57,253 Interest revenue Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2027 (the final lease payment). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) No Date General Journal Debit Credit 1 December 31, 202 Interest expense Lease payable Cash OOO 12,162 X 121,621 133,783 2 x 96,393 December 31, 202 Depreciation Expense Accumulated depreciation x 96,393 3 132,567 X December 31, 202 Cash Lease receivable Interest revenue 121,621 X 10,946 Bidwell Leasing purchased a single-engine plane for its fair value of $771,147 and leased it to Red Baron Flying Club 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.) Terms of the lease agreement and related facts were: a. Eight annual payments of $135,000 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: $771,147 Amount to be recovered (fair value) Lease payments at the beginning of each of the next eight years: ($771,147- 5.7122*) $ 135,000 *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 negotiating and consummating the completed lease transaction incurred by Bidwell Leasing were $21,091. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Determine the effective rate of interest for Bidwell Leasing for the purpose of recognizing interest revenue over the lease term. (Round your intermediate and final answers to nearest whole dollar.) Effective rate of interest 11 X % Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Prepare an amortization schedule that describes the pattern of interest revenue over the lease term for Bidwell Leasing. (Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.) Date 1/1/21 12/31/21 12/31/22 Lease Amortization Schedule Effective Decrease Payments Outstanding Interest in Balance Balance $ 771,147 X $ 135,000 $ 0$ 135,000 636,147 X 135,000 69,976 X 65,024 X 571,123 135,000 62,823 X 72,177 498,946 135,000 54,884 X 80,116 418,830 135,000 46,071 88,929 329,901 135,000 36,289 98,711 231,190 135,000 25,431 X 109,569 121,621 135,000 13,379 121,621 0 $ 1,080,000 $ 308,853 771,147 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 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 first account field. Round your intermediate and final answers to nearest whole dollar.) No Date General Journal Debit Credit 1 84,811 x December 31, 202 Interest expense Lease payable 50,189 X Cash 135,000 2. 96,393 December 31, 202 Depreciation Expense Accumulated depreciation 96,393 3 December 31, 202 Cash 135,000 Lease receivable 77,747 X 57,253 Interest revenue Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2027 (the final lease payment). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) No Date General Journal Debit Credit 1 December 31, 202 Interest expense Lease payable Cash OOO 12,162 X 121,621 133,783 2 x 96,393 December 31, 202 Depreciation Expense Accumulated depreciation x 96,393 3 132,567 X December 31, 202 Cash Lease receivable Interest revenue 121,621 X 10,946