On January 2, 2017CullumberCompany leases a machine with a fair value of $36,000from Snead, Inc., on the following terms:

1.Noncancelable term of 4 years.2.Rental of $8,800per year (at beginning of each year).3.Estimated residual value after 4 years is $4,300.CullumberCompany guarantees the residual value of $4,300.4.Estimated economic life of the machine is 5 years.5.CullumberCompany's incremental borrowing rate is7% a year. Snead's implicit rate is unknown.

On January 2, 2017 Cullumber Company leases a machine with a fair value of $36,000 from Snead, Inc., on the following terms: Noncancelable term of 4 years. Rental of $8,800 per year (at beginning of each year). Estimated residual value after 4 years is $4,300. Cullumber Company guarantees the residual value of $4,300. Estimated economic life of the machine is 5 years. Cullumber Company's incremental borrowing rate is 7% a year. Snead's implicit rate is unknown. PPS-9N!" What is the nature of this lease to Cullumber Company? This lease is a(n) I v . eTextbook and Media List of Accounts What is the present value of the minimum lease payments? (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the nal answer to 0 decimal places eg. 58,971.) Present Value of Minimum Lease Payments $ Record the lease and rst lease payment on Cullumber Company's books at the date of inception. (Round answers to 0 decimal places, es. 5,125. Credit account titles are automatically indented when 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.) Account Titles and Explanation Debit Credit (To record the lease) (To record rental payment) eTextbook and Media List of Accounts Record the rst year's depreciation on Cullumber Company's books (assume straight-line). (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when 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.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Record the interest payable on Cul lumber's books at December 3 1, 2017. (Round answers to 0 decimal places, es. 5,125. Credit account titles are automatically indented when 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.) Account Titles and Explanation Debit Credit