The following facts pertain to a non-cancelable lease agreement between Carmichael Leasing Company and Banket Company, a lessee.

(1)Commencement date: June 1, 2020.

(2)Annual lease payment due at the beginning of each year, beginning with June 1, 2020: $47,507.30.

(3)Bargain purchase option price at end of lease term: $12,000.

(4)Lease term: 4 years.

(5)Economic life of leased equipment: 12 years.

(6)Lessors cost: $161,000.

(7)Fair value of asset at June 1, 2020: $184,000.

(8)Lessors implicit rate: 6%.

(9)Lessees incremental borrowing rate: 6%.

(10)The collectibility of the lease payments by Carmichael is probable.

Required: Lessee perspective (Round all numbers to the nearest dollar)

1.Discuss the nature of this lease to Banket.

2.Compute the amount of the lease liability at the commencement of the lease.

3.Prepare a lease amortization schedule for Banket for the 4-year lease term.

4.Prepare the journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020 and 2021. Bankets annual accounting period ends on December 31.

Required: Lessor perspective(Round all numbers to the nearest dollar)

1.Discuss the nature of this lease to Carmichael.

2.Compute the amount of the lease receivable at commencement of the lease.

3.Prepare a lease amortization schedule for Carmichael for the 4-year lease term.

4.Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2020 and 2021. The lessors accounting period ends on December 31.