Exercise 21A-3 -g Teal Mountain Company leases an automobile with a fair value of $20,014 from John Simon Motors, Inc., on the following terms: Non-cancelable term of 50 months. 1. Rental of $410 per month (at the beginning of each month). (The present value at 0.5% per month is $18,190.) 2. Teal Mountain guarantees a residual value of $1,840 (the present value at 0.5% per month is $1,434). Teal Mountain expects the probable residual value to be $1,840 at the end of the lease term 3 Estimated economic life of the automobile is 60 months. 4. Teal Mountain's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. 5. X Your answer is incorrect. Try again. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) X Present value of the lease payments 19624 SHOW LIST OF ACCOUNTS LINK T XT LINK T XT Your answer is partially correct. Try again Based on the original fact pattern, record the lease on Teal Mountain's books at the date of commencement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Right-of-Use Asset 19624 Lease Liability 19624 Your answer is partially correct. Try again Record the second month's lease payment. (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 Debit Credit Lease Liability 312 Interest Expense 98 Cash 410 SHOW LIST OF ACCOUNTS Your answer is partially correct. Try again Record the first month's amortization on Teal Mountain'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 Credit Debit Amortization Expense 392.48 Right-of-Use Asset 392.48 SHOW LIST OF ACCOUNTS LINK T X LINK T XT Your answer is incorrect. Try again Suppose that instead of $1,840, Teal Mountain expects the residual value to be only $500 (the guaranteed amount is still $1,840). How does the calculation of the present value of the lease payments change from part (b)? (Round answer to 0 decimal places, e.g. 5,275.) X PV of lease payments 2340