Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2021, Rhone-Metro leased equipment to Western Soya Co.for a four-year period ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $580,000 to manufacture and has an expected useful life of six years. Its normal sales price is $618,738. The expected residual value of $26,000 at December 31, 2025, is not guaranteed. Equal payments under the lease are $174,000 (including $4,000 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 10%. Western Soya knows the interest rate Implicit in the lease payments is 9%. Both companies use straight-line depreciation. (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.) Required: 1. Show how Rhone-Metro calculated the $174,000 annual lease payments. 2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lesson? 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 lessor. 5. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2022 (the second lease payment and amortization). 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025, assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $1,200. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor Show how Rhone-Metro calculated the $174,000 annual lease payments. (Round your intermediate and final answers to nearest whole dollar.) Unguaranteed Residual Value Table or calculator function: PV of $1 na 4 9% Present Value Amount to be recovered Less: Present value of the unguaranteed residual value Amount to be recovered through periodic lease payments Lease Payments Table or calculator function: PVAD of $1 na 4 9% Lease Payments Lease payments at the beginning of each of four years Add: Maintenance costs Lease payments including executory costs 4,000 Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessor Lessee How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lessor)? Western Soya Co. Rhone-Metro Industries Finance lease Sales-type lease Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor Prepare the appropriate entries for Western Soya Co. on December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) No General Journal Debit Credit 1 Date December 31, 202 Right-of-use asset Lease payable N December 31, 202 Lease payable Prepaid maintenance expense Cash 170,000 4,000 174,000 Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor Prepare the appropriate entries for Rhone-Metro on December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) No General Journal Credit Date December 31, 202 Lease receivable Equipment Debit 618,738 1 618,738 2 174,000 December 31, 2021 Cash Maintenance fee payable Lease receivable 4,000 170,000 Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor OOOOOO Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee. (Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.) Lease Amortization Schedule Effective Decrease in Payments Interest Balance Outstanding Balance Dec.31 0 2021 2022 2023 2024 0 0 Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessor. (Round your intermediate and final answers to nearest whole dollar. Enter all amounts as positive values.) Lease Amortization Schedule Effective Decrease in Payments Interest Balance Outstanding Balance 618,738 Dec.31 2021 2021 2022 2023 2024 2025 0 0 Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor Prepare the appropriate entries for Western Soya on December 31, 2022 (the second lease payment and amortization). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) No Debit Credit 1 Date General Journal December 31, 202 Amortization expense Right-of-use asset 2 4,000 December 31, 202 Maintenance expense Prepaid maintenance expense Olo 4,000 3 December 31, 202 Interest expense Lease payable Cash >> 174,000 Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor Prepare the appropriate entries for Rhone-Metro on December 31, 2022 (the second lease payment and amortization). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) No General Journal Debit Credit 1 Date December 31, 2022 Cash Lease receivable Interest revenue Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025, assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $1,200. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) Show less No Credit Date General Journal December 31, 202 Maintenance expense Prepaid maintenance expense Debit 4,000 1 4,000 N > December 31, 202 Amortization expense Right-of-use asset Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025, assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $1,200. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.) Show less No General Journal Debit Credit 1 Date December 31, 202 Loss on leased assets Equipment Lease receivable Interest revenue