Required Delaney Company leases an automobile with a fair value of $10,000 from Simon Motors, Inc., on the following terms. 1.Non-cancelable term of 50 months. 2.Rental of $200 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.) 3Delaney guarantees a residual value of $1,180 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,180 at the end of the lease term. 4.Estimated economic life of the automobile is 60 months. 5.Delaney's incremental borrowing rate is 6% a year (0.5% a month), Simon's implicit rate is unknown 6. The lease qualifies as a financing lease. 7. Delaney uses straightline amortization Instructions 1. Prepare a lease amortization schedule 2. Record the lease on Delaney's books at the date of commencement. 3. Record the entries for the first three months of the lease on Delaney's books. The entry amounts should reference cells in the amortization table where appropriate. 4. Assume that this lease should be classified as a operating lease rather than a capital lease. Prepare the entries for the first three months on Delaney's books Required Delaney Company leases an automobile with a fair value of $10,000 from Simon Motors, Inc., on the following terms. 1.Non-cancelable term of 50 months. 2.Rental of $200 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.) 3Delaney guarantees a residual value of $1,180 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,180 at the end of the lease term. 4.Estimated economic life of the automobile is 60 months. 5.Delaney's incremental borrowing rate is 6% a year (0.5% a month), Simon's implicit rate is unknown 6. The lease qualifies as a financing lease. 7. Delaney uses straightline amortization Instructions 1. Prepare a lease amortization schedule 2. Record the lease on Delaney's books at the date of commencement. 3. Record the entries for the first three months of the lease on Delaney's books. The entry amounts should reference cells in the amortization table where appropriate. 4. Assume that this lease should be classified as a operating lease rather than a capital lease. Prepare the entries for the first three months on Delaney's books