Please help me on this accounting writing assignment. Thank you!

You are auditing the December 31, 2019financial statements ofHockney, Inc., manufacturer of novelties and party favors. During your inspection of the company garage, you discovered that a used automobile not listed in the equipmentsubledgeris parked there. You ask Stacy Reeder, plant manager, about the vehicle and she tells you that the company did not list the automobile because the company was only leasing it and elected to use the short-term lease accounting option for the lease. The lease agreement was entered into on January 1, 2019 with Crown New and Used Cars.

You decide to review the lease agreement to ensure that the lease should be afforded short-term lease treatment and you discover the following lease terms:

1.Non-cancelable term of 2 years.

2.Rent of $3,240 per year is due on Jan. 1.

3.Expected residual value after 2 years is $500.Hockneyguarantees the residual value of $500, which is equal to the expected residual value.

4.Estimated economic life of the automobile is 2.5 years.

5.Hockney'sincremental borrowing rate is 8% (the implicit rate of the lessor is unknown).

Instructions:

Write an emailto Alex Barnes, the audit partner in charge of theHockneyaudit, to discuss the above situation. Be sure to include (a) how you identified the issue, (b) what you determined about the accounting treatment of the lease, and (c) propose any journal entries necessary to correct the financial statements.

Try to limit your response to one page.

Hint:When proposing journal entries, consider what JEs need tobe recordedthat have not been recorded. Also, consider any JEs that were incorrectly recorded that will need to be reversed.

Writing Quality Rubric forLease AccountingMemo

Meets All Criteria

Meets Some Criteria

Meets Few Criteria

Summary and Context

Presents clear, accurate application ofaccounting guidance. Reasoning proceeds from clear understanding of key terms and definitions. Analysis is robust. Choices clearly reflect audience concerns and interests.

Presents some evidence and analysis but has omitted some relevant details. Some attentionhas been paidto audience interests.

Key information, evidence, and details are missing. Minimal attentionhas been givento audience.

Audience

Clear rhetorical audience. Role of writer and reader would be clear to secondary audiences. All rhetorical choiceshave been madewith audience in mind.

Partial focus on rhetorical audience and interests. Some rhetorical choiceshave been madewith audience in mind.

Limited focus on rhetorical audience and situation. Few rhetorical choiceshave been madewith audience in mind.

Organization

Organizes material with clear focus on audience, purpose, and context, using strongly rhetorical introduction and conclusion and division ofinformation whichhelps the audience. Shows good understanding of genre conventions.

Relatively well organized. Some transitions are unclear. Some consideration of the audience's interests and genre conventions.

May have a beginning, middle, and end, but transitions are unclear. Audience and/or genre conventionshave been ignored.

Writing Conventions

Exhibits effective, efficient, and engaging word choice. Consistent sentence structure. Writes fluidly and concisely. Uses active/passive voice with purpose. No mechanical or usage errors.

Some awareness of writing conventions, word choice, and sentence variety. Some mechanical and/or usage errors.

Little awareness of writing conventions, word choice, and sentence variety. Mechanical and/or usage errors impede meaning.