Question 11 of 13 0.81/1 View Policies Show Attempt History Current Attempt in Progress The following facts pertain to a non-cancelable lease agreement between Ivanhoe Leasing Company and Metlock Company, a lessee. Commencement date May 1, 2020 Annual lease payment due at the beginning of each year, beginning with May 1, 2020 $19,656.69 Bargain purchase option price at end of lease term $7,000 Lease term 5 years Economic life of leased equipment 10 years Lessor's cost $65,000 Fair value of asset at May 1, 2020 $93,000 Lessor's implicit rate 6 % Lessee's incremental borrowing rate 6 % Question 11 of 13 0.81 / 1 III The collectibility of the lease payments by Ivanhoe is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. Discuss the nature of this lease to Metlock. The nature of this lease to Metlock is a finance lease. e Textbook and Media List of Accounts Attempts: 1 of 10 used Question 11 of 13 0.81/1 III (b) Your answer is correct. Discuss the nature of this lease to Ivanhoe. The nature of this lease to Ivanhoe is a sales-type lease. e Textbook and Media List of Accounts Attempts: 1 of 10 used (c) Your answer is correct. Question 11 of 13 0.81/1 III (c) Your answer is correct. Prepare a lease amortization schedule for Metlock for the 5-year lease term. (Round answers to 2 decimal places, eg. 5,275.15.) METLOCK COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Plus BPO Interest on Liability Reduction of Lease Liability Date 5/1/20 $ i i 5/1/20 19,656.69 i 19,656.69 5/1/21 19,656.69 4,400.60 15,256.09 5/1/22 19,656.69 3,485.24 16,171.45 5/1/23 19,656.69 2,514.95 17,141.74 Question 11 of 13 0.81/1 5/1/20 19,656.69 i 19,656.69 5/1/21 19,656.69 4,400.60 15,256.09 5/1/22 19,656.69 3,485.24 16,171.45 5/1/23 19,656.69 2,514.95 17,141.74 5/1/24 19,656.69 1,486.45 18,170.24 4/30/25 7000 396.23 6,603.90 $ 105,283.45 $ 12,283.48 $ 93,000.10 e Textbook and Media List of Accounts Attempts: 3 of 10 used Question 11 of 13 0.81/1 Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020 and 2021. Metlock's annual accounting period ends on December 31. Reversing entries are used by Metlock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 20 93000 93000 (To record the lease) 20 LE (To record the first lease payment) 20 Lease Receivable Question 11 of 13 0.81/1 III Lease Receivable (To record interest expense) 11/20 Interest Receivable 2,933.74 Interest Revenue 2,933.74 (To record amortization of the right-of-use asset) 21 DODOMA LJ Question 11 of 13 0.81/1 PI IN DIE DOO (To record interest expense) (To record amortization of the right-of-use asset) e Textbook and Media List of Accounts Save for Later Last saved 1 day ago. Attempts: 1 of 10 used Submit Answer Saved work will be auto-submitted on the due date. Auto- submission can take up to 10 minutes