FIX MY ERRORS

The following facts pertain to a non-cancelable lease agreement between Sunland Leasing Company and Splish Brothers Company, a lessee. May 1, 2020 Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate $19,656.69 $7,000 5 years 10 years $65,000 $93,000 6 % 6 % The collectibility of the lease payments by Sunland is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Your answer is correct Discuss the nature of this lease to Splish Brothers. The nature of this lease to Splish Brothers is a finance lease Your answer is correct. Discuss the nature of this lease to Sunland. The nature of this lease to Sunland is a sales-type lease. Prepare a lease amortization schedule for Splish Brothers for the 5-year lease term. (Round answers to 2 decimal places, eg. 5,275.15.) Annual Lease Payment Plus BPO SPLISH BROTHERS COMPANY (Lessee) Lease Amortization Schedule Interest on Reduction of Lease Liability Liability $ Date 5/1/20 $ 5/1/20 19657 19657 5/1/21 4401 19657 15256 5/1/22 3485 19657 16171 5/1/23 2515 19657 17142 5/1/24 1486 19657 18170 4/30/25 396 7000 6604 $ 12283 $ 105283 $ 93000 Debit Credit Account Titles and Explanation Right-of-Use Asset 93000 93000 Lease Liability (To record the lease) Lease Liability 19657 19657 Cash (To record the first lease payment) Interest Expense 2934 2934 Lease Liability (To record interest expense) Amortization Expense 11467 11467 Right-of-Use Asset (To record amortization of the right-of-use asset) Lease Liability 2934 Interest Expense 2934 Interest Expense 4401 Lease Liability 15256 Cash 19657 Interest Expense 2323 2323 Lease Liability (To record interest expense) Amortization Expense 17200 17200 Right-of-Use Asset (To record amortization of the right-of-use asset)