On January 1, 2022, Rider Inc. leased a truck to Pine Valley Transportation. The lease qualifies as a finance lease under criteria established by the accounting profession. The following information relates to this agreement:

1. The lease term is for ten years. The fair value of the truck on the date of the lease is $70,000, the useful life of the truck is 15 years.
2. The lease agreement specifies that asset be returned to Rider at the end of the lease term. There is no bargain purchase option in the lease.
3. Lease payments are $8,800 per year with the first payment due January 1, 2022.
4. Pine Valleys incremental borrowing rate is 8%. The lessors implicit rate is 6% and is known to Pine Valley the lessee.
5. Maintenance costs of $900 (executory costs that are not included in the lease payments) were incurred and paid on June 1, 2022 by Pine Valley.
6. Pine Valley uses straight-line depreciation (amortization) on all its assets.
7. The present value factors for an annuity due are as follows:

8%. 7.24689

6% 7.80169

Instructions

1. Provide all necessary journal entries required of Pine Valley for the years 2022 and 2023.
2. Complete the lease amortization schedule below through 1/1/25.

(Round all answers to the nearest dollar)

Show all your work.

Date		Lease Payment		Interest		Lease Reduction		Lease Liability Balance
1/1/22

SECTION II

Worksheet

Date	Account Titles and Explanation	Dr.	Cr.