Problem 21A-6 b-f Marigold Leasing Company agrees to lease equipment to Swifty Corporation on January 1, 2017. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. The cost of the machinery is $505,000, and the fair value of the asset on January 1, 2017, is $719,000. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $110,000. Svwifty estimates that the expected residual value at the end of the lease term will be 110,000. Swifty amortizes all of its leased equipment on a straight-line basis. The lease agreement requires equal annual rental payments, beginning on January 1, 2017. 5. The collectibility of the lease payments is probable. 6. Marigold desires a 9% rate of return on its investments. Swifty's incremental borrowing rate is 10%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Click here to view factor tables Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Annual rental payment 120094 LINK TO TEXT LINK TO TEX Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Present value of minimum lease payments 699582 LINK TO TEXT LINK TO TEXT Prepare the journal entries Swifty would make in 2017 and 2018 related to the lease arrangement. (Credit account titles are automatically indented when amounti e.g. 58,972.) Account Titles and Explanation Debit Credit Date 1/1/17 Leased Equipment 699582 Lease Liability 699582 (To record the lease.) Lease Liability 120094 Cash 120094 (To record lease payment.) 12/31/17 Amortization Expense (To record amortization.) Interest Expense 57949 Interest Payable 57949 (To record interest.) 1/1/18 Lease Liability Interest Payable 12/31/18 Amortization Expense (To record amortization.) Interest Expense 51734 Interest Payable 51734 (To record interest.) Prepare the journal entries Marigold would make in 2017 and 2018 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,972.) Account Titles and Explanation Debit Credit Date 1/1/17 (To record the lease.) (To record lease payment.) 12/31/18 Suppose Swifty expects the residual value at the end of the lease term to be $100,000 but still guarantees a residual of $110,000. Compute the value of the lease liability at lease commencement. Lease liability Open Show Work Click if you would like to Show Work for this question: Problem 21A-6 b-f Marigold Leasing Company agrees to lease equipment to Swifty Corporation on January 1, 2017. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. The cost of the machinery is $505,000, and the fair value of the asset on January 1, 2017, is $719,000. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $110,000. Svwifty estimates that the expected residual value at the end of the lease term will be 110,000. Swifty amortizes all of its leased equipment on a straight-line basis. The lease agreement requires equal annual rental payments, beginning on January 1, 2017. 5. The collectibility of the lease payments is probable. 6. Marigold desires a 9% rate of return on its investments. Swifty's incremental borrowing rate is 10%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Click here to view factor tables Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Annual rental payment 120094 LINK TO TEXT LINK TO TEX Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.) Present value of minimum lease payments 699582 LINK TO TEXT LINK TO TEXT Prepare the journal entries Swifty would make in 2017 and 2018 related to the lease arrangement. (Credit account titles are automatically indented when amounti e.g. 58,972.) Account Titles and Explanation Debit Credit Date 1/1/17 Leased Equipment 699582 Lease Liability 699582 (To record the lease.) Lease Liability 120094 Cash 120094 (To record lease payment.) 12/31/17 Amortization Expense (To record amortization.) Interest Expense 57949 Interest Payable 57949 (To record interest.) 1/1/18 Lease Liability Interest Payable 12/31/18 Amortization Expense (To record amortization.) Interest Expense 51734 Interest Payable 51734 (To record interest.) Prepare the journal entries Marigold would make in 2017 and 2018 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,972.) Account Titles and Explanation Debit Credit Date 1/1/17 (To record the lease.) (To record lease payment.) 12/31/18 Suppose Swifty expects the residual value at the end of the lease term to be $100,000 but still guarantees a residual of $110,000. Compute the value of the lease liability at lease commencement. Lease liability Open Show Work Click if you would like to Show Work for this