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E21.10 (LO 2,4) (Lessee Entries with Bargain Purchase Option) The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company,
E21.10 (LO 2,4) (Lessee Entries with Bargain Purchase Option) The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. May 1, 2020 Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate The collectibility of the lease payments by Mooney is probable. $20,471.94 $ 4,000.00 5 years 10 years $65,000.00 $91,000.00 8% 8% Instructions (Round all numbers to the nearest cent.) a. Discuss the nature of this lease to Rode. b. Discuss the nature of this lease to Mooney. c. Prepare a lease amortization schedule for Rode for the 5-year lease term. d. Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020 and 2021. Rode's annual accounting period ends on December 31. Reversing entries are used by Rode
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