On January 1, 2022, Tom's Appliance Company leased delivery trucks from Capital Leasing.
The lease agreement calls for Tom's Appliance to make semiannual lease payments of $14,281.53
over a four-year lease term, payable June 30 and December 31, with the first lease
payment due on January 1, 2022. Tom's Appliance incremental borrowing rate is 8%, the same rate
Capital Leasing uses to calculate the lease payment amounts. The lease does not provide for any
ownership transfer or option to purchase the delivery trucks. Amortization is recorded on a
straight-line basis at the end of each fiscal year, which is December 31st. The fair value of the
delivery trucks is $100,000 at January 1, 2022.
Requirement 1:
1-1	Determine and provide documentation to identify this lease as either a Financing
	lease or an Operating lease for the leasee's accounting (Tom's Appliance).
1-2	Determine the present value of the lease payments (to the nearest dollar).
1-3	Prepare the Amortization Schedule for the Leasee.
1-4	Prepare the January 1, 2022, June 30, 2022, and the December 31, 2022 journal entries
	required for this lease, including amortization.