Metlock Company leases an automobile with a fair value of $16,767 from John Simon Motors, Inc., on the following terms:

1.

Non-cancelable term of 50 months.

2.

Rental of $350 per month (at the beginning of each month). (The present value at 0.5% per month is $15,528.)

3.

Metlock guarantees a residual value of $1,170 (the present value at 0.5% per month is $912). Delaney expects the probable residual value to be $1,170 at the end of the lease term.

4.

Estimated economic life of the automobile is 60 months.

5.

Metlocks incremental borrowing rate is 6% a year (0.5% a month). Simons implicit rate is unknown.

Your answer is correct.

What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.)

Present value of the lease payments

$enter the Present value of the lease payments in dollars rounded to 0 decimal places

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Attempts: 2 of 5 used

(c)

	Your answer is correct.

Based on the original fact pattern, record the lease on Metlocks books at the date of commencement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

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Attempts: 2 of 5 used

(d)

Record the first months lease payment (at commencement of the lease). (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
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

Need D answered