Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2021, Rhone-Metro leased equipment to Western Soya Co. for a noncancelable stated lease term of four years ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $280,000 to manufacture and has an expected useful life of six years. Its normal sales price is $337,600. The expected residual value of $30,000 at December 31, 2025, is not guaranteed. Western Soya Co. Is reasonably certain to exercise a purchase option on December 30, 2024, at an option price of $12,000. Equal payments under the lease are $125,000 (including $6,000 annual maintenance costs) and are due on December 31 of each year . The first payment was made on December 31, 2021. Western Soya's incremental borrowing rate is 12%. Western Soya knows the interest rate implicit in the lease payments is 9%. Both companies use straight-line amortization Hint A lease term ends for accounting purposes when an option becomes exercisable if it's expected to be exercised (.e., a BPO). (EV of $1. PV of $1. FVA - $1. PVA 06 $1. EVAD of S1 and PVAD OL51) (Use appropriate factor(s) from the tables provided.) Required: 1. Show how Rhone-Metro calculated the $125,000 annual lease payments. 2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lessor)? 3. Prepare the appropriate entries for both Western Soya Co and Rhone-Metro on December 31 , 2021. 4. Prepare an amortization schedule(s) describing the pattern of Interest over the lease term for the lessee and the lesson 5. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2022 (the second rent payment and amortization) 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 30, 2024, assuming the purchase option is exercised on that date. Complete this question by entering your answers in the tabs below. Chrome