Exercise 21-2 Bonita Company leases an automobile with a fair value of $10,755 from John Simon Motors, Inc., on the following terms: 1. Noncancelable term of 50 months. 2. Rental of $250 per month (at end of each month). (The present value at 1% per month is $9,800.) 3. Estimated residual value after 50 months is $1,040. (The present value at 1% per month is $632.) Bonita Company guarantees the residual value of $1,040. 4. Estimated economic life of the automobile is 60 months. 5. Bonita Companys incremental borrowing rate is 12% a year (1% a month). Simons implicit rate is unknown.

What is the present value of the minimum lease payments?

The present value of the minimum lease payments $

(c) Record the lease on Bonita Companys books at the date of inception. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(d) Record the first months depreciation on Bonita Companys books (assume straight-line). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 15.)

(e) Record the first months lease payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 15.)