The answers in red are incorrect and the answers in green are in fact correct.

Metlock Company leases an automobile with a fair value of $11,845 from John Simon Motors, Inc., on the following terms:

1.		Non-cancelable term of 50 months.
2.		Rental of $240 per month (at the beginning of each month). (The present value at 0.5% per month is $8,873.)
3.		Metlock guarantees a residual value of $1,240 (the present value at 0.5% per month is $920). Delaney expects the probable residual value to be $1,240 at the end of the lease term.
4.		Estimated economic life of the automobile is 60 months.
5.		Metlocks incremental borrowing rate is 6% a year (0.5% a month). Simons implicit rate is unknown.

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 19793 Your answer is partially correct. Try again. Based on the original fact pattern, record the lease on Metlock's 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 TRight-of-Use Asset x 19793 TLease Liability PLX T 19793 Your answer is correct. Record the first month's 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 TLease Liability 1240 Cash 1240 Your answer is partially correct. Try again. Record the second month's 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 Lease Liability [192 Tinterest Expense 48 TCash o 240 Your answer is partially correct. Try again. Record the first month's amortization on Metlock's 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 Depreciation Expense (195.86 X Accumulated Depreciati 195.86 x Your answer is incorrect. Try again. Suppose that instead of $1,240, Metlock expects the residual value to be only $500 (the guaranteed amount is still $1,240). 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 9263