Pat Delaney Company leases an automobile with a fair value of $16,363 from John Simon Motors, Inc., on the following terms.

1. Noncancelable term of 55 months.

2. Rental of $360 per month (at end of each month). (The present value at 1% per month is $15,173.)

3. Estimated residual value after 55 months is $1,050. (The present value at 1% per month is $607.) Delaney Company guarantees the residual value of $1,050.

4. Estimated economic life of the automobile is 59 months.

5. Delaney Companys incremental borrowing rate is 12% a year (1% a month). Simons implicit rate is unknown.

What is the present value of the minimum lease payments?

Record the lease on Delaney Companys books at the date of inception.

(d) Record the first months depreciation on Delaney Companys books (assume straight-line).

(e) Record the first months lease payment.