Question 8 of 13 0.81/1 View Policies Show Attempt History Current Attempt in Progress Teal Mountain Company leases an automobile with a fair value of $15,005 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $300 per month (at the beginning of each month). (The present value at 0.5% per month is $13,310.) 3. Teal Mountain guarantees a residual value of $1,800 (the present value at 0.5% per month is $1,403). Teal Mountain expects the probable residual value to be $1,800 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Teal Mountain's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Question 8 of 13 0.81/1 2- III (a) Your answer is correct. What is the nature of this lease to Teal Mountain? The nature of this lease is a/an finance lease. e Textbook and Media List of Accounts Attempts: 2 of 10 used (b) Your answer is correct Question 8 of 13 0.81/1 III (b) Your answer is correct. What is the present value of the lease payments to determine the lease liability? (Round answer to O decimal places, eg. 5,275.) Present value of the lease payments $ 13310 e Textbook and Media List of Accounts Attempts: 3 of 10 used (c) Your answer is correct, Question 8 of 13 0.81/1 2- III (c) Your answer is correct. Based on the original fact pattern, record the lease on Teal Mountain's books at the date of commencement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Right-of-Use Asset 13310 Lease Liability 13310 e Textbook and Media List of Accounts Attempts: 1 of 10 used Question 8 of 13 0.81 / 1 2 Attempts: 1 of 10 used (d) Your answer is correct. Record the first month's lease payment (at commencement of the lease). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit Lease Liability 300 Cash 300 e Textbook and Media List of Accounts Atorante. 410.eod Question 8 of 13 0.81/1 2- III (e) Your answer is correct. Record the second month's lease payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, eg. 5,275.) Account Titles and Explanation Debit Credit Lease Liability 235 Interest Expense 65 Cash 300 e Textbook and Media List of Accounts Attempts: 9 of 10 used Question 8 of 13 0.81/1 III (f) Your answer is partially correct. Record the first month's amortization on Teal Mountain's books (assume straight-line). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, eg. 5,275.25.) Account Titles and Explanation Debit Credit Amortization Expense Right-of-Use Asset e Textbook and Media List of Accounts Save for Later Last saved 1 day ago. Attempts: 4 of 10 used Submit Answer Saved work will be auto-submitted on the due date. Auto- submission can take up to 10 minutes
