Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to Wildhorse Limited. Oakridge and Wildhorse 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 $83,000.
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 $6,100, which is guaranteed.
4.		Wildhorse Limited assumes direct responsibility for all executory costs, which include the following annual amounts: $930 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 $20,398 to Oakridge, the lessor, beginning on January 1, 2020.
6.		The lessees incremental borrowing rate is 15%. The lessors implicit rate is 14% and is known to the lessee.
7.		Wildhorse Limited uses the straight-line depreciation method for all equipment.
8.		Wildhorse uses reversing entries when appropriate.

Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. 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.)

Present Value

$enter the Present Value in dollars rounded to 0 decimal places

Prepare an amortization schedule for Wildhorse 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.)

Wildhorse Limited (Lessee) Lease Amortization Schedule
Date		Annual Lease Payment		Interest on Unpaid Obligation		Reduction of Lease Obligation		Balance of Lease Obligation
1/1/20								$enter a dollar amount
1/1/20		$enter a dollar amount				$enter a dollar amount		enter a dollar amount
1/1/21		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
1/1/22		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
1/1/23		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
1/1/24		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
1/1/25		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
		$enter a total amount		$enter a total amount		$enter a total amount

Prepare all of Wildhorses 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. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
1/1/20	enter an account title to record inception of lease and first lease payment	enter a debit amount	enter a credit amount
	enter an account title to record inception of lease and first lease payment	enter a debit amount	enter a credit amount
	enter an account title to record inception of lease and first lease payment	enter a debit amount	enter a credit amount
	(To record inception of lease and first lease payment.)
12/31/20	enter an account title to record interest	enter a debit amount	enter a credit amount
	enter an account title to record interest	enter a debit amount	enter a credit amount
	(To record interest.)
	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	enter an account title to record depreciation expense	enter a debit amount	enter a credit amount
	(To record depreciation expense.)

Prepare a schedule contrasting the journal entries prepared in part (c) with those using an unguaranteed residual value of $6,100. Ignore payments of insurance and property taxes. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

	Guaranteed Residual Value			Unguaranteed Residual Value
Account Titles and Explanation	Debit	Credit		Debit	Credit
Capitalization of lease 1/1/20:
enter an account title	enter a debit amount	enter a credit amount		enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount		enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount		enter a debit amount	enter a credit amount
End of year 31/12/20:
enter an account title to record interest expense	enter a debit amount	enter a credit amount		enter a debit amount	enter a credit amount
enter an account title to record interest expense	enter a debit amount	enter a credit amount		enter a debit amount	enter a credit amount
(To record interest expense.)
enter an account title to record depreciation	enter a debit amount	enter a credit amount		enter a debit amount	enter a credit amount
enter an account title to record depreciation	enter a debit amount	enter a credit amount		enter a debit amount	enter a credit amount
(To record depreciation.)