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 olternate methods of financing. On September 30,2021 , the company leased a delivery truck to a local florist, Anything Grows. The fiscal year for both companies ends December 31. The lease agreement specified quarterly payments of $3,650 beginning September 30,2021 , the beginning of the lease, and each quarter (December 31, March 31, and June 30) through June 30, 2024 (three-year lease term). The florist had the option to purchase the truck on September 29,2023 , for $7,300 when it was expected to have o residual value of $11,950. The estimated useful life of the truck is four years. Mid-South Auto Leasing's quarterly interest rate for determining payments was 2% (approximately 8% annually) Mid-South poid $30.460 for the truck. Both companies use straight-fine depreciation or amortizotion. Anything Grows' incremental interest rate is 8% Hint A lease term ends for occounting purposes when on option becomes exercisable if it's expected to be exercised (le. a BPO) (FE of S1. PV of S1. EVA of 51, PYA of S1. EVAD of S1 and PVAD of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. Colculate the omount of selling profit that Mid-South would recognize in this sales-type lease. (Be careful to note thot, olthough payments occur on the last calendar day of each quarter, since the first poyment was at the beginning of the lease. payments represent an annuity due] 2. Prepore the appropriate entries for Anything Grows and Mid-South on September 30,2021. 3. Prepore an amortizotion schedule(s) describing the pattern of interest expense for Anything Grows and interest revenue for MidSouth Auto Leasing over the lease term. 4. Prepare the oppropriate entries for Anything Grows and Mid-South Auto Leosing on December 31, 2021. 5. Prepare the appropriate entries for Anything Grows and Mid-South on September 29, 2023. 05suming the purchase option was exercised on thot dore. 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 olternate methods of financing. On September 30,2021 , the company leased a delivery truck to a local florist, Anything Grows. The fiscal year for both companies ends December 31. The lease agreement specified quarterly payments of $3,650 beginning September 30,2021 , the beginning of the lease, and each quarter (December 31, March 31, and June 30) through June 30, 2024 (three-year lease term). The florist had the option to purchase the truck on September 29,2023 , for $7,300 when it was expected to have o residual value of $11,950. The estimated useful life of the truck is four years. Mid-South Auto Leasing's quarterly interest rate for determining payments was 2% (approximately 8% annually) Mid-South poid $30.460 for the truck. Both companies use straight-fine depreciation or amortizotion. Anything Grows' incremental interest rate is 8% Hint A lease term ends for occounting purposes when on option becomes exercisable if it's expected to be exercised (le. a BPO) (FE of S1. PV of S1. EVA of 51, PYA of S1. EVAD of S1 and PVAD of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. Colculate the omount of selling profit that Mid-South would recognize in this sales-type lease. (Be careful to note thot, olthough payments occur on the last calendar day of each quarter, since the first poyment was at the beginning of the lease. payments represent an annuity due] 2. Prepore the appropriate entries for Anything Grows and Mid-South on September 30,2021. 3. Prepore an amortizotion schedule(s) describing the pattern of interest expense for Anything Grows and interest revenue for MidSouth Auto Leasing over the lease term. 4. Prepare the oppropriate entries for Anything Grows and Mid-South Auto Leosing on December 31, 2021. 5. Prepare the appropriate entries for Anything Grows and Mid-South on September 29, 2023. 05suming the purchase option was exercised on thot dore
