On January 1, 2021, Rick's Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease for three years. Rick's had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $11,000 due on December 31 of each year, calculated by the lessor using a 7% discount rate. Assume that at the beginning of the third year, January 1, 2023, Rick's had made significant improvements to the truck whose cost could be recovered only if it exercises the extension option, creating an expectation that extension of the lease was "reasonably certain." The relevant interest rate at that time was 8%. (FV of $1, PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of 5 (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry, if any, at the beginning of the third year for the lessee to account for the reassessment 2. Prepare the journal entry, if any, at the beginning of the third year for the lessor to account for the reassessments You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company's interest expense for the year ended December 31, 2021. Your accounting group provided you the following Information on the company's debt (EV o $1, PV of $1, EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. On July 1, 2021, Moonlight Bay issued bonds with a face amount of $2,600,000. The bonds mature in 10 years and interest of 11% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 12%. Moonlight Bay records interest at the effective rate. 2. At December 31, 2020, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $690,000. The annual payment is $155,000, payable each June 30. 3. On January 1, 2021, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $80,000 beginning January 1, 2021. Moonlight Bay's incremental borrowing rate on the date of the lease was 12% and the lessor's implicit rate, which was known by Moonligh Bay, was 11%