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 $600,000 to manufacture and has an expected useful life of six years. Its normal sales price is $689,309. The expected residual value of $27,000 at December 31, 2025, is not guaranteed. Equal payments under the lease are $200,000 (including $5,000 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 13%, Western Soya knows the interest rate implicit in the lease payments is 11% 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 $200,000 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 $1,000. Complete this question by entering your answers in the tabs below. Required 3 Required 3 Required 4 Required 4 Required 5 Required 5 Required 6 Required 6 Required 1 Required 2 Lessee Lessor Lessee Lessor Lessee Lessor Lessee Lessor Show how Rhone-Metro calculated the $200,000 annual lease payments. (Round your intermediate and final answers to nearest whole dollar.) Unguaranteed Residual Value Table or calculator function: Present Value Amount to be recovered Amount to be recovered through periodic lease payments Lease Payments Table or calculator function: Lease Payments Lease payments at the beginning of each of four years Lease payments including executory costs Required 1 Required 2 Required 3 Lessee Required 3 Required 4 Lessor Lessee Required 4 Lessor Required 5 Lessee Required 5 Lessor Required 6 Lessee Required 6 Lessor 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 Required 1 Required 3 Lessee > Required 1 Required 2 Required 3 Required 3 Required 4 Lessee Lessor Lessee Required 4 Lessor Required 5 Lessee Required 5 Lessor Required 6 Lessee Required 6 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.) View transaction list 1 Record lease in the books of lessee. 2 Record cash payment in the books of lessee. Credit Note : = journal entry has been entered Record entry Clear entry View general journal Required 1 Required 2 Required 3 Lessee Required 3 Lessor Required 4 Required 4 Lessee | Lessor Required 5 Lessee Required 5 Lessor | Required 6 Lessee Required 6 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.) View transaction list 1 Record lease in the books of lessor. 2 Record cash received in the books of lessor. bit Credit Note : = journal entry has been entered Record entry Clear entry View general journal Required 1 Required 2 Required 3 Lessee Required 3 Lessor Required 4 Lessee Required 4 Lessor Required 5 Lessee Required 5 Required 6 Lessor Lessee Required 6 Lessor 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 2021 2022 2023 2024 Required 1 Required 2 Required 3 Lessee Required 3 Lessor Required 4 Lessee Required 4 Lessor Required 5 Lessee Required 5 Required 6 Lessor Lessee Required 6 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 Dec.31 2021 2021 2022 2023 2024 2025 Required 1 Required 2 Required 3 Lessee Required 3 Lessor Required 4 Lessee Required 4 Lessor Required 5 Lessee Required 5 Lessor Required 6 Lessee Required 6 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.) View transaction list 1 Record amortization expense in the books of lessee. 2 Record maintenance expense in the books of lessee. 3 Record cash payment in the books of lessee. Credit Note : = journal entry has been entered Record entry Clear entry View general journal Required 4 Lessor Required 5 Lessor > Required 1 Required 3 Lessee Required 3 Lessor Required 4 Lessee Required 4 Lessor Required 5 Lessee Required 5 Required 6 Lessor Lessee Required 6 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.) View transaction list Journal entry worksheet Record cash received in the books of lessor. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2022 Record entry Clear entry View general journal Required 1 Required 2 Required 3 Required 3 Lessee Lessor Required 4 Lessee Required 4 Required 5 Lessor Lessee Required 5 Lessor Required 6 Lessee Required 6 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 $1,000. (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.) View transaction list 1 Record maintenance expense in the books of lessee. 2 Record amortization expense in the books of lessee. Credit Note : = journal entry has been entered Record entry Clear entry View general journal Required 1 Required 2 Required 3 Lessee Required 3 Lessor Required 4 Lessee Required 4 Lessor Required 5 Lessee Required 5 Lessor Required 6 Lessee Required 6 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 $1,000. (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.) View transaction list Journal entry worksheet Record the end of the lease in the books of lessor. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2022 Record entry Clear entry View general journal