Question $4$ of $10$

$\frac{0\mathrm{.}43}{3}$

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Marin Company leases an automobile with a fair value of $$11,693$ from Robert Motors, Inc., on the following terms.

Non$-$cancelable term of $50$ months.

Rental of $$230$ per month $($at the beginning of each month$).($The present value at $0\mathrm{.}5\%$ per month is $$10,204.)$

Marin guarantees a residual value of $$1,600($the present value at $0\mathrm{.}5\%$ per month is $$1,247).$ Marin expects the probable residual value to be $$1,600$ at the end of the lease term.

Estimated economic life of the automobile is $60$ months.

Marin's incremental borrowing rate is $6\%$ a year $(0\mathrm{.}50\%$ a month$).$ Robert's implicit rate is unknown.

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$($For calculation purposes, use $5$ decimal places as displayed in the factor table provided.$)$

Question $4$ of $10$

$\frac{1\mathrm{.}29}{3}$

$($c$)$

Your answer is correct.

Based on the original fact pattern, record the lease on Marin's books at the date of commencement. $($List debit entry before credit entry. 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.$)$

Account Titles and Explanation

Debit

Credit

Right$-$of$-$Use Asset

$10204$

Lease Liability

Question $4$ of $10$

$\frac{1\mathrm{.}29}{3}$

$($d$)$

Record the first month's lease payment $($at commencement of the lease$).($List debit entry before credit entry. 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$.5,275.)$

Account Titles and Explanation

Debit

Credit