Pat Delaney Company leases an automoble with a fair value of $12,334 from John Simon Motors, Inc.on the following terms:

1. Nonconcealable term of 57 months.

2. Rental of $270 per month (at the end of each month). (The present value at 1% per month is $11,688).

3. Estimated residual value after 57 months is $1120 (The present value at 1% per month is $635). Delaney Company guarantees the residual value of $1120.

4. Estimated economic life of the automobile is 60 months.

5. Delaney Company's incremental borrowing rate is 12% ayear (1% a month). Simon's implicit rate is unknown.

Questions:

a) What is the present value of the minimum lease payments?

b) Record the lease on Delaney Company's book at the date of inception.

c) Record the first month's depreciation on Delaney Company's books (Assume straight-line).

d) Record the first month's lease payment.