Problem 21A 6 b f Metlock Leasing Company agrees to lease equipment to Bonita 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 2 The cost of the machinery is $520,000, and the fair value of the asset on January 1, 2017, is $737,000 3 At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $110,000 Bonita estimates that the expected residual value at the end of the lease term will be 110,000 Bonita amortizes all of its leased equipment on a straight line basis 4 The lease agreement requires equal annual rental payments, beginning on January 1, 2017 5 The collectibility of the lease payments is probable 6 Metlock desires a 10 rate of return on its investments Bonitas incremental borrowing rate is 11 , and the lessors implicit rate is unknown (Assume the accounting period ends on December 31 ) 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 O decimal places e g 58,972 ) Annual rental payment LINK TO TEXT LINK TO TEXT 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 O decimal places e g 58,972 ) Present value of minimum lease payments LINK TO TEXT LINK TO TEXT Prepare thejournal entries Bonita would make in 2017 and 2018 related to the lease arrangement Credit account titles are automaticar y required, select No Entry for the account titles and enter O for the amounts Round answers to o decimal places e g 58,972 ) dented en amount is entered Do not indent manually, no entry s Date Account Titles and Explanation Debit To record the lease ) (To record lease payment) To record amortization )

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Problem 21A-6 b-f Metlock Leasing Company agrees to lease equipment to Bonita Corporation on January 1, 2017. The following information relates to the lease agreement.

Problem 21A-6 b-f

Metlock Leasing Company agrees to lease equipment to Bonita 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.
2.		The cost of the machinery is $520,000, and the fair value of the asset on January 1, 2017, is $737,000.
3.		At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $110,000. Bonita estimates that the expected residual value at the end of the lease term will be 110,000. Bonita amortizes all of its leased equipment on a straight-line basis.
4.		The lease agreement requires equal annual rental payments, beginning on January 1, 2017.
5.		The collectibility of the lease payments is probable.
6.		Metlock desires a 10% rate of return on its investments. Bonitas incremental borrowing rate is 11%, and the lessors implicit rate is unknown.

(Assume the accounting period ends on December 31.)

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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 O decimal places e.g. 58,972.) Annual rental payment LINK TO TEXT LINK TO TEXT 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 O decimal places e.g. 58,972.) Present value of minimum lease payments LINK TO TEXT LINK TO TEXT Prepare thejournal entries Bonita would make in 2017 and 2018 related to the lease arrangement. Credit account titles are automaticar y required, select "No Entry" for the account titles and enter O for the amounts. Round answers to o decimal places e.g. 58,972.) dented en amount is entered. Do not indent manually, no entry s Date Account Titles and Explanation Debit To record the lease.) (To record lease payment) To record amortization.)