**PLEASE ANSWER ALL PARTS AND SHOW EXCEL FORMULAS USED**

Michael Scott Paper Company (MSPC) started their operations late in July 2018. The owner (Michael Scott) assumed he could run the company from his apartment, however, due to covenants in his housing contract he was unable to run his business from home. As a result, Michael decided to buy a warehouse. After much deliberation and consideration, he determined that leasing a warehouse would be more financially viable than buying one.

Michael reached out to an old friend who helped him lease a warehouse from Darrel Inc. The warehouse has a current value of $510,000. The lease calls for MSPC to make 25 annual payments of $58,058.02 beginning January 1^st, 2019, which is the beginning of the lease, and at each January 1^st, thereafter. The warehouses useful life is 50 years. The going interest rate for warehouse rental in the area is 12%. Assume that the annual amortization expense for the prior period is recorded at the same time as the annual lease payment.

Fill out the attached amortization schedule (using Excel Formulas) and respond to the following.

1)Using the PV Function, calculate the Present Value of the lease in Cell E2. Copy and paste the Excel Formula you used below.

2)Using the PMT function, show how the payment amount of 58,058.02 was calculated in Cell B3. Copy and paste the Excel Formula you used below.

3)What type of lease has MSPC entered? How did you determine this?

4)What journal entries will MSPC make on January 1^st, 2019? What journal entries will MSPC make on January 1^st, 2026? What journal entries will MSPC make on January 1^st, 2042?

Effective Interest Decrease in BalanceOutstanding Balance Date Payment 455,357.13