Kingbird Company leases an automobile with a fair value of $20,275 from John Simon Motors, Inc., on the following terms:

1. Non-cancelable term of 50 months. 2. Rental of $430 per month (at the beginning of each month). (The present value at 0.5% per month is $19,077.) 3. Kingbird guarantees a residual value of $1,030 (the present value at 0.5% per month is $803). Delaney expects the probable residual value to be $1,030 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Kingbird's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown

E/ 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
Interest Expense	?
Lease Liability	?
Cash		430

G/ Suppose that instead of $1, 030, Kingbird expects the residual value to be only $500 (the guaranteed amount is still $1,030). 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.) PV of lease payments $ ?

F/ Record the first month's amortization on Kingbird'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	Debit	Credit
Amortization Expense	381.52
?		381.52