Tamarisk Corporation leases a building to Carla Vista, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 10 years with equal annual rental payments of $ 3,848 at the end of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $ 34,800, a book value to Tamarisk of $ 23,200, and a useful life of 15 years. 4. At the end of the lease term, Tamarisk and Carla Vista expect the residual value of the building to be $ 11,600, and this amount is guaranteed by Money, Inc., a third party. 5. Tamarisk wants to earn a 6% return on the lease, and collectibility of the payments is probable. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Correct answer icon Your answer is correct. Determine the nature of this lease to both Tamarisk and Carla Vista. The lease is a/an financing lease to Tamarisk. The lease is a/an operating lease to Carla Vista. eTextbook and Media Solution List of Accounts Attempts: 2 of 3 used (b) Your Answer Correct Answer (Used) Assume the present value of lease payments and third-party guarantee is $ 34,800 and the rate of return to amortize the net lease receivable to zero is 14.00%. Prepare the amortization schedules Tamarisk would use to amortize the net lease receivable to zero. (Round answers to 0 decimal places, e.g. 5,275.) TAMARISK CORPORATION (Lessor) Lease Amortization Schedule Sales-Type Lease Date Annual Lease Payment Interest on Lease Receivable Recovery of Lease Receivable Lease Receivable 1/1/20 $ $ $ $ 34,800 12/31/20 3,848 2,088 1,760 33,040 12/31/21 3,848 1,982 1,866 31,174 12/31/22 3,848 1,870 1,978 29,195 12/31/23 3,848 1,752 2,096 27,100 12/31/24 3,848 1,626 2,222 24,878 12/31/25 3,848 1,493 2,355 22,523 12/31/26 3,848 1,351 2,497 20,026 12/31/27 3,848 1,202 2,646 17,380 12/31/28 3,848 1,043 2,805 14,575 12/31/29 3,848 873 * 2,975 11,600 12/31/30 11,600 11,600 $ 50,080 $ 15,280 $ 34,800 *Rounded $ 2 TAMARISK CORPORATION (Lessor) Lease Amortization Schedule Direct Financing Lease Date Annual Lease Payment Interest on Lease Receivable Recovery of Lease Receivable Lease Receivable 1/1/20 $ $ $ $ 23,200 12/31/20 3,848 3,248 600 22,600 12/31/21 3,848 3,164 684 21,916 12/31/22 3,848 3,068 780 21,136 12/31/23 3,848 2,959 889 20,247 12/31/24 3,848 2,835 1,013 19,234 12/31/25 3,848 2,693 1,155 18,079 12/31/26 3,848 2,531 1,317 16,762 12/31/27 3,848 2,347 1,501 15,261 12/31/28 3,848 2,137 1,711 13,550 12/31/29 3,848 1,898 * 1,950 11,600 12/31/29 11,600 11,600 $ 50,080 $ 26,880 $ 23,200 *Rounded $ 1 (c) Prepare the journal entries to record the entries for Tamarisk for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)