Mid-South Auto Leasing leases vehicles to consumers. The attraction to customers is that the company can offer competitive prices due to volume buying and requires an interest rate implicit in the lease that is one percent below alternate methods of financing. On September 30, 2018, the company leased a delivery truck to a local florist, Anything Grows. The lease agreement specified quarterly payments of $4,500 beginning September 30, 2018, the beginning of the lease, and each quarter (December 31, March 31, and June 30) through June 30, 2021 (three-year lease term). The florist had the option to purchase the truck on September 29, 2020, for $9,000 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 Leasings quarterly interest rate for determining payments was 2% (approximately 8% annually). Mid-South paid $35,000 for the truck. Both companies use straight-line depreciation or amortization. Anything Grows incremental interest rate is 8%. Hint: A lease term ends for accounting purposes when an option becomes exercisable if its expected to be exercised (i.e., a BPO). (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. 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 annuity due.) 2. Prepare the appropriate entries for Anything Grows and Mid-South on September 30, 2018. 3. Prepare an amortization schedule(s) describing the pattern of interest expense for Anything Grows and interest revenue for Mid-South Auto Leasing over the lease term. 4. Prepare the appropriate entries for Anything Grows and Mid-South Auto Leasing on December 31, 2018. 5. Prepare the appropriate entries for Anything Grows and Mid-South on September 29, 2020, assuming the purchase option was exercised on that date.

Complete this question by entering your answers in the tabs below Reouret 1 Reguset 2Required 3 Required Required S Calolaxe tha amount of selling profit that Mid-South would rnacognie in this salos-type lease. (Be careul to note that athough parments occur on the last calandar dar of 4ach quarte? sice erha first pamant was at the begining of the laasa Completa this qustion by entering your answers in the tabs below. Presare the appropriate entries for Amything Grows and Mid-South on Sectember 3D, 2018. If no entry is recuired for a transactionlewent, selest No journal entrye required" in the first account field. Round your intermedate and final anewers to nearest whole col ) Ruquined 3 Completa this question by untring your aners in the tabs below. Presare an amorticebion schedule(s) describing the ptern of interest experse for Anything Grows and interest revenue for Md-South Auto Leesing aver the lesse tem,(Round your intemediste and fingl answers to nearest whale dol ar. Enteral Complete this question by entering your answwrs in the tabs below. Prepare te 1pmcrate entnes for Amything Gro and Nid-South Auto Leeeing on December 31, 201 (F ro enty15 reoured for transsctionerert ,tect 74ojourn???v reaured. r, th first account field. Round yo r intermedi te ard fire annwers to nesrest whole dolar) erry requred outmel ery requred Complete this question by entering your enswers in the tabs belew Required 1 Required 2 Regured3 ReoureReouired 5 areare the approprue..rtricc roomring droes and Hid-South on Saoecmber 29, 202o, a sursie purchase coton was axarcised on at date. ir no aebry is required for atrardactian ant salact "No fournal entry squrad In the ra acoeune tald Round yoeur incemdaa and final anws to neanest whele dollar.)