Problem 21A-6 b-f Monty Leasing Company agrees to lease equipment to Flounder 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 $525,000, and the fair value of the asset on January 1, 2017, is $713,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $102,000. Flounder estimates that the expected residual value at the end of the lease term will be 103,000. Flounder amortizes all of its leased equipment on a straight-line basis 4. The lease agreement requires equal annual rental payments, beginning an January 1, 2017. 5. The collectibility of the lease payments is probable. 5. Monty desires a 11% rate of return on its investments. Founder's incremental borrowing rate is 12%, and the lessor's implicit rate is unknown. collectibility f Assume the accounting period ends on December 31.) Your answer is correct. 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 x Your answer is incorrect. Try again. 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 76261 Prepare the journal entries Monty would make in 2017 and 2018 related to the lease arrangement. (Credit account tities 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.o. 58,972.) DateAccount Titles and Explanation Debit Credit Lease Receivable t of Gnods Sold Sales Revenue To record the lease.) Cash 12G83 Lease Receivable 12683 To record lease payment) 12/31/17Lease Recelvable 122580 Interest Revenue 22580 1/18 Cash 12683 Lease Receivable 12683 Lease Receivable interest Revenue 122580 LIST OF ACCOUNTS Your answer is incorrect. Try again suppose Aounder expects the residual value at the end of the lease term to be93,000 but still guarantees a residual of $103,000 Compute the value of the lease liability at lease commencement. Lease liability 94405 Problem 21A-6 b-f Monty Leasing Company agrees to lease equipment to Flounder 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 $525,000, and the fair value of the asset on January 1, 2017, is $713,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $102,000. Flounder estimates that the expected residual value at the end of the lease term will be 103,000. Flounder amortizes all of its leased equipment on a straight-line basis 4. The lease agreement requires equal annual rental payments, beginning an January 1, 2017. 5. The collectibility of the lease payments is probable. 5. Monty desires a 11% rate of return on its investments. Founder's incremental borrowing rate is 12%, and the lessor's implicit rate is unknown. collectibility f Assume the accounting period ends on December 31.) Your answer is correct. 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 x Your answer is incorrect. Try again. 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 76261 Prepare the journal entries Monty would make in 2017 and 2018 related to the lease arrangement. (Credit account tities 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.o. 58,972.) DateAccount Titles and Explanation Debit Credit Lease Receivable t of Gnods Sold Sales Revenue To record the lease.) Cash 12G83 Lease Receivable 12683 To record lease payment) 12/31/17Lease Recelvable 122580 Interest Revenue 22580 1/18 Cash 12683 Lease Receivable 12683 Lease Receivable interest Revenue 122580 LIST OF ACCOUNTS Your answer is incorrect. Try again suppose Aounder expects the residual value at the end of the lease term to be93,000 but still guarantees a residual of $103,000 Compute the value of the lease liability at lease commencement. Lease liability 94405