Splish Brothers Company leases an automobile with a fair value of $18,767 from John Simon Motors, Inc., on the following terms:

1.		Non-cancelable term of 50 months.
2.		Rental of $390 per month (at the beginning of each month). (The present value at 0.5% per month is $17,302.)
3.		Splish Brothers guarantees a residual value of $1,410 (the present value at 0.5% per month is $1,099). Delaney expects the probable residual value to be $1,410 at the end of the lease term.
4.		Estimated economic life of the automobile is 60 months.
5.		Splish Brotherss incremental borrowing rate is 6% a year (0.5% a month). Simons implicit rate is unknown.

A. Based on the original fact pattern, record the lease on Splish Brotherss books at the date of commencement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

B. Record the first months lease payment (at commencement of the lease).

C. Record the second months lease payment

D. Record the first months amortization on Splish Brotherss 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.)

E. Suppose that instead of $1,410, Splish Brothers expects the residual value to be only $500 (the guaranteed amount is still $1,410). 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.)