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Item 1

On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portions of the Equipment Leasings lease amortization schedule appear below:

Jan. 1	Payments		Effective Interest		Decrease in Balance		Outstanding Balance
							314,048
2021	24,000				24,000		290,048
2022	24,000		14,502		9,498		280,550
2023	24,000		14,028		9,972		270,578
2024	24,000		13,529		10,471		260,107
2025	24,000		13,005		10,995		249,112
2026	24,000		12,456		11,544		237,568
2027	24,000		11,878		12,122		225,446
2038	24,000		11,272		12,728		44,627
2039	24,000		2,231		21,769		22,858
2040	24,000		1,143		22,857		0

1. What is Majestics lease liability after the first lease payment?? 2. What amount would Majestic record as a right-of-use asset? 3. What is the lease term in years? 4. What is the effective annual interest rate? (Round your percentage answers to 1 decimal place.) 5. What is the total amount of lease payments? 6. What is the total effective interest expense recorded over the term of the lease?