Exercise 21A-3 a-g (Part Level Submission) Metlock Company leases an automobile with a fair value of $11,845 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $240 per month (at the beginning of each month). (The present value at 0.5% per month is $10,648.) 3. Metlock guarantees a residual value of $1,240 (the present value at 0.5% per month is $966). Metlock expects the probable residual value to be1,240 at the end of the lease term. Estimated economic life of the automobile is 60 months. Metlock's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. 4. Click here to view the factor table (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. What is the nature of this lease to Metlock? finance The nature of this lease is a/an lease. (b) Your answer is correct. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments 10648 Your answer is correct. Record the first month's lease payment (at commencement of the lease). (Credit account titles are automatically indented when amount is entered. Do not indent manually Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Lease Liability Debit Credit 240 Cash 240 (f) Record the first month's amortization on Metlock's books (assume straight-line). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.25.) Account Titles and Explanation Amortization Expense Right-of-Use Asset Debit Credit