Each of the four independent situations below describes a sales-type lease in which annual lease payments of $10,000 are payable at the beginning of each year. Each is a finance lease for the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $ FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1 4 4 4 11% Situation 2 3 4 4 5 5 11% 11% 4 7 11% 0 Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value: Guaranteed by lessee Unguaranteed Purchase option: After (years) Exercise price Reasonably certain? $ 4,000 0 $ 2,000 $ 2,000 0 $ 4,000 none n/a 3 $ 7,000 no $ 1,000 no 3 $ 3,000 yes n/a Determine the following amounts at the beginning of the lease: (Round your final answers to nearest whole dollar.) Determine the following amounts at the beginning of the lease: (Round your final answers to nearest whole dollar.) X Answer is complete but not entirely correct. Situation 1 2 3 4 A. The lessor's 1. Total lease payments 2. Gross investment in the lease $ 40,000 40,000 34,437 $ 40,000 $ 40,000 $ 44,000 X 44,000 44,000 44,000 x 37,072 33,659 X 33,659 X 3. Net investment in the lease B. 40.000 40,000 The lessee's 4 Total lease payments 5 Right-of-use asset 6. Lease liability 44,000 X 34,437 X 34,437 40,000 40,000 X 40,000 X 34,437 OO 34,437 34,437 34,437 x To raise operating funds, North American Courier Corporation sold its building on January 1, 2021, to an insurance company for $500,000 and immediately leased the building back. The lease is for a 10-year period ending December 31, 2030, at which time ownership of the building will revert to North American Courier. The building has a carrying amount of $400,000 (original cost $1,000,000). The lease requires North American to make payments of $88,492 to the insurance company each December 31. The building had a total original useful life of 30 years with no residual value and is being depreciated on a straight-line basis. The lease has an implicit rate of 12%. (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.) Required: 1. Prepare the appropriate entries for North American (a) on January 1, 2021, to record the transaction and (b) on December 31, 2021, to record necessary adjustments. 2. Show how North American's December 31, 2021, balance sheet and income statement would reflect the sale-leaseback. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Show how North American's December 31, 2021, balance sheet and income statement would reflect the sale-leaseback. (Round your intermediate and final answers to nearest whole dollar.) Balance Sheet Assets: $ Less: Accumulated depreciation 500,000 X (133,334) X 366,666 $ Liabilities: Current: Notes payable 31,911 Noncurrent: Notes payable $ 439,597 Income Statement Interest expense Depreciation expense 60,000 33,334 93,334 Each of the four independent situations below describes a sales-type lease in which annual lease payments of $10,000 are payable at the beginning of each year. Each is a finance lease for the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $ FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1 4 4 4 11% Situation 2 3 4 4 5 5 11% 11% 4 7 11% 0 Lease term (years) Asset's useful life (years) Lessor's implicit rate (known by lessee) Residual value: Guaranteed by lessee Unguaranteed Purchase option: After (years) Exercise price Reasonably certain? $ 4,000 0 $ 2,000 $ 2,000 0 $ 4,000 none n/a 3 $ 7,000 no $ 1,000 no 3 $ 3,000 yes n/a Determine the following amounts at the beginning of the lease: (Round your final answers to nearest whole dollar.) Determine the following amounts at the beginning of the lease: (Round your final answers to nearest whole dollar.) X Answer is complete but not entirely correct. Situation 1 2 3 4 A. The lessor's 1. Total lease payments 2. Gross investment in the lease $ 40,000 40,000 34,437 $ 40,000 $ 40,000 $ 44,000 X 44,000 44,000 44,000 x 37,072 33,659 X 33,659 X 3. Net investment in the lease B. 40.000 40,000 The lessee's 4 Total lease payments 5 Right-of-use asset 6. Lease liability 44,000 X 34,437 X 34,437 40,000 40,000 X 40,000 X 34,437 OO 34,437 34,437 34,437 x To raise operating funds, North American Courier Corporation sold its building on January 1, 2021, to an insurance company for $500,000 and immediately leased the building back. The lease is for a 10-year period ending December 31, 2030, at which time ownership of the building will revert to North American Courier. The building has a carrying amount of $400,000 (original cost $1,000,000). The lease requires North American to make payments of $88,492 to the insurance company each December 31. The building had a total original useful life of 30 years with no residual value and is being depreciated on a straight-line basis. The lease has an implicit rate of 12%. (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.) Required: 1. Prepare the appropriate entries for North American (a) on January 1, 2021, to record the transaction and (b) on December 31, 2021, to record necessary adjustments. 2. Show how North American's December 31, 2021, balance sheet and income statement would reflect the sale-leaseback. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Show how North American's December 31, 2021, balance sheet and income statement would reflect the sale-leaseback. (Round your intermediate and final answers to nearest whole dollar.) Balance Sheet Assets: $ Less: Accumulated depreciation 500,000 X (133,334) X 366,666 $ Liabilities: Current: Notes payable 31,911 Noncurrent: Notes payable $ 439,597 Income Statement Interest expense Depreciation expense 60,000 33,334 93,334