Kingbird Corporation leases a building to Blossom, Inc. on January 1, 2020. The following facts pertain to the lease agreement.

1.		The lease term is 10 years with equal annual rental payments of $3,863 at the end of each year.
2.		Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.
3.		The building has a fair value of $35,300, a book value to Kingbird of $23,000, and a useful life of 15 years.
4.		At the end of the lease term, Kingbird and Blossom expect the residual value of the building to be $12,300, and this amount is guaranteed by Money, Inc., a third party.
5.		Kingbird wants to earn a 6% return on the lease, and collectibility of the payments is probable.

a). Determine the nature of this lease to both Kingbird and Blossom.

b) Assume the present value of lease payments and third-party guarantee is $35,300 and the rate of return to amortize the net lease receivable to zero is 14.44%. Prepare the amortization schedules Kingbird would use to amortize the net lease receivable to zero. (

c) Assume the present value of lease payments and third-party guarantee is $35,300 and the rate of return to amortize the net lease receivable to zero is 14.44%. Prepare the amortization schedules Kingbird would use to amortize the net lease receivable to zero.

KINGBIRD CORPORATION (Lessor) Lease Amortization Schedule Sales-Type Lease
Date		Annual Lease Payment		Interest on Lease Receivable		Recovery of Lease Receivable		Lease Receivable
1/1/20		$		$		$		$
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
12/31/25
12/31/26
12/31/27
12/31/28
12/31/29				*
12/31/30
		$		$		$

*Rounded $0

KINGBIRD CORPORATION (Lessor) Lease Amortization Schedule Direct Financing Lease
Date		Annual Lease Payment		Interest on Lease Receivable		Recovery of Lease Receivable		Lease Receivable
1/1/20		$		$		$		$
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
12/31/25
12/31/26
12/31/27
12/31/28
12/31/29				*
12/31/29

d) Prepare the journal entries to record the entries for Kingbird for 2020 and 2021

e)Prepare the journal entries for Blossom (the lessee) for 2020 and 2021, assuming the rate implicit in the lease is known to Blossom.

part B the schedule is for a sales type lease. part c is for a direct finanace type lease.