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Exercise 21A-25 a-d (Part Level Submission) Giannis Corporation leases a building to Jabari, Inc. on January 1, 2017. The following facts pertain to the lease agreement. 1. The lease term is 10 years with equal annual rental payments of $3,449 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 $34,000, a book value to Giannis of $22,000, and a useful life of 15 years. 4. At the end of the lease term, Giannis and Jabari expect the residual value of the building to be $12,000, and this amount is guaranteed by Money, Inc., a third party. 5. Giannis wants to earn a 5% return on the lease, and collectibility of the payments is probable. Your answer is correct. Assume the present value of lease payments and third-party guarantee is $34,000 and the rate of return to amortize the net lease receivable to zero is 13.24%. Prepare the amortization schedules Giannis would use to amortize the net lease receivable to zero. (Round answers to o decimal places, e.g. 5,275.) Annual Lease __ Payment Interest on Recovery of Lease Receivable Lease Receivable Lease Receivable Date 1/1/17 34000 12/31/17 3449 1 1700 1749 32250 12/31/18 8 3449 1613 1836 30414 12/31/ 19 3 449 1 1521 1928 28485 WABABKURU 12/31/20 3449 1424 2025 26460 12/31/21 3449 1323 2126 24334 12/31/22 3449 1217 2232 22102 12/31/23 3449 1105 2344 19758 12/31/24 3449 988 2461 17297 12/31/25 3449 865 1 2584 14713 12/31/26 3449 736 2713 12000 12/31/26 12000 12000 46490 12492 33998 Lease Amortization Schedule Direct Financing Lease Interest on Recovery of Lease Receivable Lease Receivable Lease Receivable Annual Lease _Payment Date 1/1/17 22000 12/31/17 3449 2913 536 21464 12/31/18 3449 2842 607 20857 12/31/19 3449 2761 688 20169 12/31/20 3449 2670 779 19390 12/31/21 T 3449 2567 882 18508 12/31/22 T 3449 2450 999 17509 12/31/23 3449 2318 1131 16378 12/31/24 T 3449 2168 1281 15097 12/31/25 3449 1999 1450 13647 12/31/26 3449 1807 1642 12005 12/31/26 12000 12005 46490 24490 22000 Prepare the journal entries to record the entries for Giannis for 2017 and 2018. (Credit account titles are automatically indented when the amount is entered. Do not in 5,275.) Date Account Titles and Explanation Debit 1/1/17 Lease Receivable 34000 Deferred Gross Profit 12000 Leased Asset 22000 12/31/17 Cash 3449 Deferred Gross Profit Lease Revenue SS 2913 Lease Receivable IN 1749 12/31/18 Cash 3449 Deferred Gross Profit Lease Revenue 2842 | Lease Receivable 1836 Prepare the journal entries for Jabari (the lessee) for 2017 and 2018, assuming the rate implicit in the lease is known to Jabari. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to o decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/17 || Leased Equipment Lease Liability 12/31/17 12/31/17 Cash Cash Deferred Gross Profit | QUODDDDDDD Lease Revenue Lease Receivable ble 12/31/18 || Cash Deferred Gross Profit Lease Revenue Lease Receivable