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Instructions Berne Company (lessor) enters into a lease with Fox Company to lease equipment to Fox beginning January 1, 2016. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of $50,000 to be made at the end of each year. 2. The equipment costs $130,000. The equipment has an estimated life of 4 years and an estimated residual value at the end of the lease term of zero. Fox agrees to pay all executory costs. The interest rate implicit in the lease is 12%. The initial direct costs are insignificant and assumed to be zero. 9999' The collectibility of the rentals is reasonably assured, and there are no important uncertainties surrounding the amount of unreimbursable costs yet to be incurred by the lessor. Required: 1. Next Level Determine if the lease is a sales-type or direct nancing lease from Berne's point of view (calculate the selling price and assume that this is also the fair value). 2. Prepare a table summarizing the lease receipts and interest revenue earned by the lessor. 3. Prepare journal entries for Berne, the lessor, for the years 2016 and 2017. 111 121 122 141 152 21 1 231 250 261 311 331 CHART OF ACCOUNTS Berne Company General Ledger ASSETS Cash Accounts Receivable Lease Receivable Inventory Prepaid Insurance LIABILITIES Accounts Payable Salaries Payable Uneamed Interest Income Taxes Payable EQUITY Common Stock Retained Earnings 411 431 500 511 512 521 532 540 541 559 910 REVENUE Sales Revenue Interest Revenue: Leases EXPENSES Cost of Asset Leased Insurance Expense Utilities Expense Salaries Expense Bad Debt Expense Interest Expense Depreciation Expense Miscellaneous Expenses Income Tax Expense Calculate the selling price and assume that this is also the fair value. Additional Instruction $151,867.47 X Beme Company Lease Payments Received and Interest Revenue Earned Summary Score: 0/54 2016 - 2019 Annual Lease Interest Revenue Amount of Net ll med nea Date Payment at 12% on Net Investment Lease Receivable Net lnvesIment Interest: Leases Reaived Investment Rewvered I I I I I \frepare journal entries for Beme, the lessor, for the years 201 6 and 2017. Additional Instructions Question not attempted. GENERAL JOURNAL Score: 01169 1 \\--\\__ 2 \\--\\__ 3 \\--\\__ 4 \\--\\__ \fTable 4 - Present Value of an Ordinary Annuity of 1: p0 n i: WONOU'I-hUNH-l I-lI-ll-lI-lI-ll-ll-ll-l NOIUI-huNl-IO 1.5% 0.985222 1.955883 2.912200 3.854385 4.782645 5.697187 6.598214 7.485925 8.360517 9.222185 10.071118 10.907505 11.731532 12.543382 13.343233 14.131264 14.907649 4.0% 0.961538 1.886095 2.775091 3.629895 4.451822 5.242137 6.002055 6.732745 7.435332 8.110896 8.760477 9.385074 9.985648 10.563123 11.118387 11.652296 12.165669 4.5% 0.956938 1.872668 2.748964 3.587526 4.389977 5.157872 5.892701 6.595886 7.268790 7.912718 8.528917 9.118581 9.682852 10.222825 10.739546 11.234015 11.707191 5.0% 0.952381 1.859410 2.723248 3.545951 4.329477 5.075692 5.786373 6.463213 7.107822 7.721735 8.306414 8.863252 9.393573 9.898641 10.379658 10.837770 11.274066 1 l I 5.5% 0.947867 1.846320 2.697933 3.505150 4.270284 4.995530 5.682967 6.334566 6.952195 7.537626 8.092536 8.618518 9.117079 9.589648 10.037581 10.462162 10.864609 _(1+f)" 6.0% 0.943396 1.833393 2.673012 3.465106 4.212364 4.917324 5.582381 6.209794 6.801692 7.360087 7.886875 8.383844 8.852683 9.294984 9.712249 10.105895 10.477260 7.0% 0.934579 1.808018 2.624316 3.387211 4.100197 4.766540 5.389289 5.971299 6.515232 7.023582 7.498674 7.942686 8.357651 8.745468 9.107914 9.446649 9.763223 8.0% 0.925926 1.783265 2.577097 3.312127 3.992710 4.622880 5.206370 5.746639 6.246888 6.710081 7.138964 7.536078 7.903776 8.244237 8.559479 8.851369 9.121638 9.0% 0.917431 1.759111 2.531295 3.239720 3.889651 4.485919 5.032953 5.534819 5.995247 6.417658 6.805191 7.160725 7.486904 7.786150 8.060688 8.312558 8.543631 10.0% 0.909091 1.735537 2.486852 3.169865 3.790787 4.355261 4.868419 5.334926 5.759024 6.144567 6.495061 6.813692 7.103356 7.366687 7.606080 7.823709 8.021553 12.0% 0.892857 1.690051 2.401831 3.037349 3.604776 4.111407 4.563757 4.967640 5.328250 5.650223 5.937699 6.194374 6.423548 6.628168 6.810864 6.973986 7.119630 Table 5 - Present Value of Annuity Due: UUNO'UI-FWNI-I: I-lI-ll-ll-lI-ll-ll-ll-l NlthNI-IO 1.5% 1.000000 1.985222 2.955883 3.912200 4.854385 5.782645 6.697187 7.598214 8.485925 9.360517 10.222185 11.071118 11.907505 12.731532 13.543382 14.343233 15.131264 4.0% 1.000000 1.961538 2.886095 3.775091 4.629895 5.451822 6.242137 7.002055 7.732745 8.435332 9.110896 9.760477 10.385074 10.985648 1 1.563123 12.1 18387 12.652296 _ - -1 pD,n,i= (+44)\" 4.5% 5.0% 1.000000 1.000000 1.956938 1.952381 2.872668 2.859410 3.748964 3.723248 4.587526 4.545951 5.389977 5.329477 6.157872 6.075692 6.892701 6.786373 7.595886 7.463213 8.268790 8.107822 8.912718 8.721735 9.528917 9.306414 10.118581 9.863252 10.682852 10.393573 11.222825 10.898641 11.739546 11.379658 12.234015 11.837770 1 l + l 5.5% 1.000000 1.947867 2.846320 3.697933 4.505150 5.270284 5.995530 6.682967 7.334566 7.952195 8.537626 9.092536 9.618518 10.117079 10.589648 11.037581 11.462162 6.0% 1.000000 1.943396 2.833393 3.673012 4.465106 5.212364 5.917324 6.582381 7.209794 7.801692 8.360087 8.886875 9.383844 9.852683 10.294984 10.712249 11.105895 7.0% 1.000000 1.934579 2.808018 3.624316 4.387211 5.100197 5.766540 6.389289 6.971299 7.515232 8.023582 8.498674 8.942686 9.357651 9.745468 10.107914 10.446649 8.0% 1.000000 1.925926 2.783265 3.577097 4.312127 4.992710 5.622880 6.206370 6.746639 7.246888 7.710081 8.138964 8.536078 8.903776 9.244237 9.559479 9.851369 9.0% 1.000000 1.917431 2.759111 3.531295 4.239720 4.889651 5.485919 6.032953 6.534819 6.995247 7.417658 7.805191 8.160725 8.486904 8.786150 9.060688 9.312558 10.0% 1.000000 1.909091 2.735537 3.486852 4.169865 4.790787 5.355261 5.868419 6.334926 6.759024 7.144567 7.495061 7.813692 8.103356 8.366687 8.606080 8.823709 12.0% 1.000000 1.892857 2.690051 3.401831 4.037349 4.604776 5.111407 5.563757 5.967640 6.328250 6.650223 6.937699 7.194374 7.423548 7.628168 7.810864 7.973986