Mid$-$South Auto Leasing leases vehicles to consumers. The attraction to customers is that the company can offer competitive prices due to volume buying. On September $30,2024,$ the company leased a delivery truck to a local florist, Anything Grows.

The fiscal year for both companles ends December $31.$

The lease agreement specified quarterly payments of $$3,500$ beginning September $30,2024,$ the beginning of the lease, and each quarter $($December $31,$ March $31,$ and June $30)$ through June $30,2027($three$-$year lease term$).$

The florist had the option to purchase the truck on September $29,2026,$ for $$7,000$ when it was expected to have a residual value of $$11,500.$

The estimated useful life of the truck is four years.

Mid$-$South Auto Leasing's quarterly Interest rate for determining payments was $3\%($approximately $12\%$ annually$).$ Mid$-$South pald $$29,200$ for the truck.

Both companies use straight$-$IIne depreclation or amortization.

Anything Grows' Incremental Interest rate is $12\%.$

Hint: A lease term ends for accounting purposes when an option becomes exercisable If It's expected to be exercised

Note: Use tables, Excel, or a financlal calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)$

Required:

Calculate the amount of selling profit that Mid$-$South would recognize in this sales$-$type lease. $($Be careful to note that, although payments occur on the last calendar day of each quarter, since the first payment was at the beginning of the lease, payments represent an annulty due.$)$

Prepare the approprlate entrles for Anything Grows and Mid$-$South on September $30,2024$

Prepare an amortization schedule$($s$)$ describing the pattern of Interest expense for Anything Grows and Interest revenue for MidSouth Auto Leasing over the lease term.

Prepare the approprlate entrles for Anything Grows and Mid$-$South Auto Leasing on December $31,2024.$

Prepare the approprlate entrles for Anything Grows and Mid$-$South on September $29,2026,$ assuming the purchase optlon was exercised on that date.