Exercise 21-03 Metlock Company leases an automobile with a fair value of $16,767 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months 2. Rental of $350 per month (at the beginning of each month). (The present value at 0.5% per month is 515,528.) 3. Matlock quarantees a residual value of $1,170 (the present value at 0.5% per month is 5912), Delaney expects the probable residual value to be $1,170 at the end of the lease term 4. Estimated economic life of the automobile is 60 months. 5. Matlock's Incremental borrowing rate is 6% a year (0.5% a month), Simon's implicitrate is unknown Click here to view factor tables {For calculation purposes, we decimal places as displayed in the factor table provided) What is the nature of this lease to Metlock? The nature of this lease is a/an finance lease What is the present value of the lease payments to determine the lease liability (Hound answer to a decimal places, 3275) Present value of the lease payments 15527 Based on the original fact pattern, record the lease on Metick's books at the date of commencement (Credit account titles are automatically indented when amounts entered. Do norindent manually.) Based on the original fact pattern, record the lease on Metlock's books at the date of commencement. (Credit account tities are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Delt Credit Record the first month's lease payment (at commencement of the lease). (Credit account titles are automatically indented when amount is entered. Do notice manually. Round answers to decimal places... 5.275) Debit Credit Account Titles and explanation Record the second month's lease payment. (Credit account titles are automatically indeed when amount is entered. Do not indent may decimal places, e.o. 5,275.) CALCULATOR FULL SCREEN PONTE VERSION BACK NERT Account Titles and Explanation Interest Expense Debit Credit 80 Lease Liability 270 Cash 350 Record the first month's amortization on Metlockbooks (assume straight line). (Credit account ttles are automatically indented when amount is entered Dot indent manually. Round answers to 2 decimal places, ... 5 275.25.) Account Titles and Explanation Debit Credit Suppose that instead of 51,170, Metlock e.pects the residual value to be only $500 (the guaranteed amount is still $1,170). How does the content lease payments change from part (h) (Round answer to decimal places, 0.5,275) PV of lease payments 16051 Click if you would like to show Work for this question: Share