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 thot is one percent below alternate methods of financing. On September 30,2021 , the company leased a delivery truck to a local florist. Anything Grows. The fiscal year for both companles ends December 31. The leose ogreement specified quarterly payments of $3.650 beginning September 30. 2021, the beginning of the leose, ond each quarter (December 31, March 31, and June 30) through June 30, 2024 (three-yeor lease term). The florist had the option to purchose the truck on September 29,2023 , for $7,300 when it was expected to have o residual volue of $11,950. The estimated useful life of the truck is four years. Mid-South Auto Leasing's quarterly interest rate for determining payments wo5 2% (approximately 8% annually) Mid-South paid $30,460 for the truck. Both companies use straight-line depreciation or amortization. Anything Grows' incremental interest rote is 8% : Hint: A leose term ends for occounting purposes when an option becomes exercisable if it's expected to be exercised (ie, a BPO). (EV. of S1. PV of S1. EVA.OFS1. PVA olS1. EVAD ofS1 ond PVAD of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. Colculate the amount of selling profit that Mid-South would recognize in this soles-type lease. (Be careful to note that, olthough poyments 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. Prepore the appropriate entries for Anything Grows and Mid.South on September 30.2021 3. Prepare on amortization schedule(s) describing the pottern of interest expense for Anything Grows and interest revenue for MidSouth Auto Leosing over the lease term 4. Prepare the opprapriote entries for Anything Grows and Mid-South Auto Leosing on December 31, 2021 5. Prepore the oppropriote entries for Anything Grows and Mid-South on September 29. 2023, ossuming the purchase option was exercised on that dote. 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.) (Round your intermediate and final answers to nearest whole dollar.) Prepare the appropriate entries for Anything Grows and Mid-South on September 30,2021 . (if no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate. and final answers to neare whole dollar.) 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. (Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.) Prepare the appropriate entries for Anything Grows and Mid-South Auto Leasing on December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) Prepare the appropriate entries for Anything Grows and Mid-South on September 29, 2023, assuming the purchase option was exercised on that date. (If no entry is required for a transactiondevent, select "No joumal entry required" in the first account field, Round your intermediate and final answers to nearest whole dollar.) PV=(1+i)31 ABAE 3 Future Value of an Ordinary Annuity of $1 FVA=1(1+1)+1 IABLE 5 Future Value of an Arinuity Due of $1 FYAD=[i(1+i)21](1+i) Muit 6 Present Value of an Arnuty Due of $1 PVAD=[111+11](1+1)
