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Pearl Company, a risky start-up, is evaluating a lease arrangement being offered by TSP Company for use of a standard computer system. The lease is

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Pearl Company, a risky start-up, is evaluating a lease arrangement being offered by TSP Company for use of a standard computer system. The lease is non-cancelable, and in no case does Pearl receive title to the computers during or at the end of the lease term. The lease starts on January 1, 2020, with the first rental payment due on January 1, 2020. Additional information related to the lease and the underlying leased asset is as follows. $3.179.60 3 years 5 years $3,120 at end of 3 years, which approximates fair value 1 year at $1.560; no penalty for nonrenewal; standard renewal clause $10,400 Yearty rental Lease term Estimated economic life Purchase option Renewal option Fair value at commencement Cost of asset to lessor Residual value Guaranteed Unguaranteed Lessor's implicit rate (known by the lessee) Estimated fair value at end of lease $10.400 -0- $3.120 1095 53. 120 Analyze the lease capitalization tests for this lease for Pearl. Prepare the journal entries for Pearl for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, eg 1.25124 and the final answers to 2 decimal places, eg. 52.75.18 no entry is required, select "No entry for the account titles and enter for the amounts Record journal entries in the order presented in the problem Click here to view factor tables Date Account Titles and Explanation Debit Credit 11/20 no entry no entry To record the lease) 11:20 Rent pense 3179.60 Cash 317 (To record the first lease payment) 12131.20 V no entry nony net To record year end entry! Analyze the lease capitalization tests for this lease for Pearl. Assuming Pearl has the option to purchase the system at the end of the lease for $100. Prepare the journal entries for Pearl for 2020. (Credit account titles are automatically indented when the amount Is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, eg 1.25124 and the final answers to 2 decimal places, eg 52.75. If no entry is required, select "No entry for the account titles and enter for the amounts. Record joumal entries in the order presented in the problem.) Click here to view factor tables Date Account Titles and Explanation Debit Credit (To record lease) (To record first lease payment) To record interest To record amortization expense)

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