REQUIRED: 3. Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club. (Round your intermediate calculations to the nearest dollar amount.) 4. Determine the effective rate of interest for Bidwell Leasing for the purpose of recognizing interest revenue over the lease term. 5. Prepare an amortization schedule that describes the pattern of interest revenue over the lease term for Bidwell Leasing. (Round your intermediate calculations to the nearest dollar amount.)

Requirement #3:

Requirement #4:

Requirement #5:

Bidwell Leasing purchased a single-engine plane for its fair value of $695,470 and leased it to Red Baron Flying Club on January 1, 2018.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Terms of the lease agreement and related facts were: a. Eight annual payments of $125,000 beginning January 1, 2018, the beginning of the lease, and at each December 31 through 2024. Bidwell Leasing's implicit interest rate was 12%. The estimated useful life of the plane is eight years. Payments were calculated as follows: Amount to be recovered (fair value) Lease payments at the beginning of each of the next eight years: ($695, 470= 5.56376*) $695, 470 $125,000 *Present value of an annuity due of $1: n = 8, i = 12%. b. Red Baron's incremental borrowing rate is 13%. c. Incremental Costs of negotiating and consummating the completed lease transaction incurred by Bidwell Leasing were $18,555. Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club. (Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.) Lease Amortization Schedule Effective Decrease Payments Interest in Balance Date Outstanding Balance 1/1/18 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 $ 0 $ 0 $ 0 Determine the effective rate of interest for Bidwell Leasing for the purpose of recognizing interest revenue over the lease term. Effective rate of interest % Prepare an amortization schedule that describes the pattern of interest revenue over the lease term for Bidwell Leasing. (Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.) Lease Amortization Schedule Effective Decrease Payments Interest in Balance Date Outstanding Balance 1/1/18 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 $ 0 $ 0 $ 0