Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2024, Rhone-Metro leased equipment to Western Soya Company for a noncancelable stated lease term of four years ending December 31, 2028, at which time possession of the leased asset will revert back to Rhone-Metro. - The equipment cost $300,000 to manufacture and has an expected useful life of six years. - Its normal sales price is $366,633. - The expected residual value of $40,000 on December 31,2028 , is not guaranteed. - Western Soya Company is reasonably certain to exercise a purchase option on December 30, 2027, at an option price of $20,000 - Equal payments under the lease are $136,000 (including $5,000 annual maintenance costs) and are due on December 31 of each year. - The first payment was made on December 31, 2024. - Western Soya's incremental borrowing rate is 14%. - Western Soya knows the interest rate implicit in the lease payments is 12%. Both companies use straight-line depreciation or amortization. [Hint: A lease term ends for accounting purposes when an option becomes exercisable if it's expected to be exercised (i.e,, a BPO).] Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of \$1. EVA of \$1, PVA of \$1. EVAD of $1 and PVAD of $1) Required: 1. Show how Rhone-Metro calculated the $136,000 annual lease payments. 2. How should this lease be classified (a) by Western Soya Company (the lessee) and (b) by Rhone-Metro industries (the lessor)? 3. Prepare the appropriate entries for both Western Soya Company and Rhone-Metro on December 31, 2024. 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 31,2025 (the second rent payment and amortization). 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 30, 2027, assuming the purchase option is exercised on that date. Complete this question by entering your answers in the tabs below. Show how Rhone-Metro calculated the $136,000 annual lease payments. Note: Round your intermediate and final answers to nearest whole dollar