Exercise 115 Hayes Corp. is a manufacturer of truck trailers. On January 1, 2018, Hayes Corp. leases 9 trailers to Lester Company under a 5-year noncancelable lease agreement. The following information about the lease and the trailers is provided: 1. 2. 3. 4. Equal annual payments that are due on January 1 each year provide Hayes Corp. with an 11% return on net investment (present value factor for 5 periods at 11% is 4.10245). Titles to the trailers pass to Lester at the end of the lease. The fair value of each trailer is $51,600. The cost of each trailer to Hayes Corp. is $46,500. Each trailer has an expected useful life of nine years. Collectibility of the lease payments is probable. Click here to view factor table. What type of lease is this for the lessor? Calculate the annual lease payment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Annual lease payment Prepare a lease amortization schedule for Hayes Corp. for the first three years. (Round answers to 0 decimal places e.g. 5,275.) Hayes Corp. Lease Amortization Schedule (Lessor) Interest on Lease Lease Annual Lease Rental Receivable Receivable Recovery Date Lease Receivable 1/1/18 1/1/18 1/1/19 1/1/20 Prepare the journal entries for the lessor for 2018 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Accou Debit Credit January 1, 2018 (To record the lease) January 1, 2018 (To record receipt of the first lease payments) December 31, 2018 (To record interest earned during the first year of the lease) Click if you would like to Show Work for this question: Open Show Work Exercise 115 Hayes Corp. is a manufacturer of truck trailers. On January 1, 2018, Hayes Corp. leases 9 trailers to Lester Company under a 5-year noncancelable lease agreement. The following information about the lease and the trailers is provided: 1. 2. 3. 4. Equal annual payments that are due on January 1 each year provide Hayes Corp. with an 11% return on net investment (present value factor for 5 periods at 11% is 4.10245). Titles to the trailers pass to Lester at the end of the lease. The fair value of each trailer is $51,600. The cost of each trailer to Hayes Corp. is $46,500. Each trailer has an expected useful life of nine years. Collectibility of the lease payments is probable. Click here to view factor table. What type of lease is this for the lessor? Calculate the annual lease payment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Annual lease payment Prepare a lease amortization schedule for Hayes Corp. for the first three years. (Round answers to 0 decimal places e.g. 5,275.) Hayes Corp. Lease Amortization Schedule (Lessor) Interest on Lease Lease Annual Lease Rental Receivable Receivable Recovery Date Lease Receivable 1/1/18 1/1/18 1/1/19 1/1/20 Prepare the journal entries for the lessor for 2018 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Accou Debit Credit January 1, 2018 (To record the lease) January 1, 2018 (To record receipt of the first lease payments) December 31, 2018 (To record interest earned during the first year of the lease) Click if you would like to Show Work for this question: Open Show Work