Hayes Inc. Must show EVERY step, I must know exactly how you got every number. Everything in the solution and work should be clear and easy to understand on how you got each and every number. Any formulas used should be included, Excel spread sheet would be preferred (I have this table in an excel spread sheet that you can work from ,and I would just have to email it to you since I can't seem to add the file on this question) make sure I can see every formula, and know where you got every number from). If you have any question please let me know

-This assignment has different numbers from other questions like it listed elsewhere, so please pay attention to only the numbers provided below. Thank you.

The Problem

On January 1, 2014, Hayes, Inc. leases equipment from Smithsonian Company for an annual lease rental of $25,000. The lease term is five years, and the lessor's interest rate implicit in the lease is 8%. The lessee's incremental borrowing rate is 8.25%. The useful life of the equipment is five years, and its estimated residual value equals its removal cost. Annuity tables indicate that the present value of an annual lease rental of $1 (at 8% rate) is $3.993. The fair value of leased equipment equals the present value of rentals. (Assume the lease is capitalized.)

Requirements:

1) Prepare accounting entries required by Hayes, Inc. for 2014.

2) Compute and illustrate the effect on the income statement for the year ended December 31, 2014, and for the balance sheet as of December 31, 2014.

3) Construct a table showing payments of interest and principal made every year for the five-year lease term.

4) Construct a table showing expenses charged to the income statement for the five-year lease term if the equipment is purchased. Show a column for (1) amortization, (2) interest, and (3) total expenses.

5) In five sentences/ 1 paragraph, discuss the income and cash flow implications from this capital lease.