Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Sheridan Limited Oakridge and Sheridan follow ASPE The following information relates to the agreement 1 The term of the non cancellable lease is five years, with no renewal option The equipment has an estimated economic life of six years 2 The assets fair value at January 1, 2020, is $81,200 3 The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7,000, which is guaranteed 4 Sheridan Limited assumes direct responsibility for all executory costs, which include the following annual amounts $950 to Rocky Mountain Insurance Ltd for insurance and $1,650 to James Township for property taxes 5 The agreement requires equal annual rental payments of $18,079 to Oakridge, the lessor, beginning on January 1, 2020 6 The lessees incremental borrowing rate is 10 The lessors implicit rate is 9 and is known to the lessee 7 Sheridan Limited uses the straight line depreciation method for all equipment 8 Sheridan uses reversing entries when appropriate Calculate the PV of the future minimum lease payments using any of the following methods (1) factor tables, (2) a financial calculator, or (3) Excel functions (Round factor values to 5 decimal places, e g 1 25124 and final answers to 0 decimal places, e g 1,452 ) Prepare an amortization schedule for Sheridan Limited for the lease term Use Excel ( Hint You may find the ROUND formula helpful for rounding in Excel ) (Round factor values to 5 decimal places, e g 1 25124 and final answers to 0 decimal places, e g 1,452 ) Prepare all of Sheridans journal entries for 2020 to record the lease agreement and the lease payments LeBlancs accounting period ends on December 31 Ignore payments of insurance and property taxes Prepare a schedule contrasting the journal entries prepared in part (c) with those using an unguaranteed residual value of $7,000 Ignore payments of insurance and property taxes

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Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Sheridan Limited. Oakridge and Sheridan follow ASPE. The following information relates

Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Sheridan Limited. Oakridge and Sheridan follow ASPE. The following information relates to the agreement.

1.		The term of the non-cancellable lease is five years, with no renewal option. The equipment has an estimated economic life of six years.
2.		The assets fair value at January 1, 2020, is $81,200.
3.		The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7,000, which is guaranteed.
4.		Sheridan Limited assumes direct responsibility for all executory costs, which include the following annual amounts: $950 to Rocky Mountain Insurance Ltd. for insurance and $1,650 to James Township for property taxes.
5.		The agreement requires equal annual rental payments of $18,079 to Oakridge, the lessor, beginning on January 1, 2020.
6.		The lessees incremental borrowing rate is 10%. The lessors implicit rate is 9% and is known to the lessee.
7.		Sheridan Limited uses the straight-line depreciation method for all equipment.
8.		Sheridan uses reversing entries when appropriate.

Calculate the PV of the future minimum lease payments using any of the following methods: (1) factor tables, (2) a financial calculator, or (3) Excel functions. (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 1,452.)

Prepare an amortization schedule for Sheridan Limited for the lease term. Use Excel. (Hint: You may find the ROUND formula helpful for rounding in Excel.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 1,452.)

Prepare all of Sheridans journal entries for 2020 to record the lease agreement and the lease payments. LeBlancs accounting period ends on December 31. Ignore payments of insurance and property taxes.

Prepare a schedule contrasting the journal entries prepared in part (c) with those using an unguaranteed residual value of $7,000. Ignore payments of insurance and property taxes.