Skysong Company leases an automobile with a fair value of $13,568 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $270 per month (at the beginning of each month). (The present value at 0.5% per month is $11,979.) 3. Skysong guarantees a residual value of $1,700 (the present value at 0.5% per month is $1,325). Delaney expects the probable residual value to be $1,700 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Skysongs incremental borrowing rate is 6% a year (0.5% a month). Simons implicit rate is unknown. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Correct answer iconYour answer is correct. What is the nature of this lease to Skysong? The nature of this lease is a/an select a nature of the lease finance lease. Correct answer iconYour answer is correct. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments $enter the Present value of the lease payments in dollars rounded to 0 decimal places 11978 Correct answer iconYour answer is correct. Based on the original fact pattern, record the lease on Skysongs books at the date of commencement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title Right-of-Use Asset enter a debit amount 11978 enter a credit amount enter an account title Lease Liability enter a debit amount enter a credit amount 11978 Correct answer iconYour answer is correct. Record the first months lease payment (at commencement of the lease). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit enter an account title Lease Liability enter a debit amount 270 enter a credit amount enter an account title Cash enter a debit amount enter a credit amount 270 eTextbook and Media List of Accounts Partially correct answer iconYour answer is partially correct. Record the second months lease payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit enter an account title Interest Expense enter a debit amount 270 enter a credit amount enter an account title Lease Liability enter a debit amount 11978 enter a credit amount enter an account title Cash enter a debit amount enter a credit amount 12248 eTextbook and Media List of Accounts Partially correct answer iconYour answer is partially correct. Record the first months amortization on Skysongs books (assume straight-line). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.25.) Account Titles and Explanation Debit Credit enter an account title Amortization Expense enter a debit amount enter a credit amount enter an account title Right-of-Use Asset enter a debit amount enter a credit amount eTextbook and Media List of Accounts Incorrect answer iconYour answer is incorrect. Suppose that instead of $1,700, Skysong expects the residual value to be only $500 (the guaranteed amount is still $1,700). How does the calculation of the present value of the lease payments change from part (b)? (Round answer to 0 decimal places, e.g. 5,275.) PV of lease payments $enter the present value of lease payments in dollars rounded to 0 decimal places