Provide Journal Entries and ratio calculations

1) Provide the journal entries required to properly account for the following four leases from the lessee's perspective. Information for Lease #1: Provide journal entries for the following operating lease, lessee's perspective. Use the old rules. You will be able to find the old rules for an operating lease in any textbook, Youtube video, Internet website that is a few years old. (Hint: You will not be able to correctly solve the case without understanding the old rules.) Record the journal entries for the first two years. (Hint: The old rules assumed that a business was simply renting an asset for a period of time. No assets or liabilites were recorded.) Lease is signed January 1. Annual lease payment due Dec. 31: $850,000. Lease Term (years): 5 years Economic Life of Leased Equipment (years): 8 years Option to extend lease: No Lease Incentives (e.g. bargain purchase option): No Incremental borrowing rate: 4.5% Present Value of Lease at Inception: $3,731,000. Information for Lease #2: Provide journal entries for the following operating lease, lessee's perspective. Use the new rules. If you search on the web (e.g. Youtube) for help, be sure the information is regarding the new rules. The lease information is identical to Lease #1. Record the journal entries for the first two years. Lease is signed January 1. Annual lease payment due Dec. 31: $850,000. Lease Term (years): 5 years Economic Life of Leased Equipment (years): 8 years Option to extend lease: No Lease Incentives (e.g. bargain purchase option): No Incremental borrowing rate: 4.5% Present Value of Lease at Inception: $3,731,000. Accounting for Operating Leases - New Rules Information for Lease #3: Provide journal entries for the following lease, lessee's perspective. Record the lease as an operating lease and use the old rules for operating leases. Hint: Recording this lease incorrectly as an operating lease (old rules) will help you understand the case. Record the journal entries for the first two years. Lease is signed January 1. Annual lease payment due Dec. 31: $2,600,000. Lease Term (years): 5 years Economic Life of Leased Equipment (years): 6 years . Option to extend lease: No Lease Incentives (e.g. bargain purchase option): No Incremental borrowing rate: 4.5% Non 11 fI 11 A 14000 Information for Lease #4: Provide journal entries for the following lease, lessee's perspective. Determine if the lease should be recorded as an operating lease or a financing lease, and record the lease journal entries appropriately. Record the journal entries for the first two years. Lease is signed January 1. Annual lease payment due Dec. 31: $2,600,000. Lease Term (years): 5 years Economic Life of Leased Equipment (years): 6 years Option to extend lease: No Lease Incentives (e.g. bargain purchase option): No Incremental borrowing rate: 4.5% Present Value of Lease at Inception: $11,414,000. Accounting for Financing Leases Example 2) Calculate the following ratios for each division and the company as a whole from the given financial statements. What does each ratio indicate? According to the ratios, how is the company doing financially? Gross Profit Margin Profit Margin Return on Investment Asset Turnover Current Ratio Debt to Equity Ratio Debt to Asset Ratio