This is a(n) (finance/operating)lease for lessee (SRTB) because (all five/ at least one/ at least three/ none) of the Group I criteria is (are) met.

This is a(n) (direct-financing/ operating/ sales-type) lease for the lessor (Burch) because (all five/ at least one/ at least three/ none) of group I criteria is(are) met.

On January 1, 2018, SRTB Company leases a fleet of stock delivery vehicles from Burch Motors, Inc. More info Under the terms of the lease, SRTB must pay $55,000 on January 1 of each year, beginning on January 1, 2018, over a 4-year term. The delivery vehicles have a useful life of 4 years. SRTB depreciates similar vehicles that it owns using the straight-line method. SRTB's incremental borrowing rate is 14%, and the 5% implicit rate in the lease is known to the lessee. The vehicles cost Burch Motors $200,000 and have a fair value of $204,779. Burch has no uncertainties as to future costs and collection. The lease terms do not contain a transfer of ownership, and there is no purchase option. There is also no residual value specified in the contract because no residual value is expected at the end of the lease term by the lessor. Assume that there are neither initial direct costs nor nonlease components related to the lease agreement. Requirement b. Prepare the lease amortization table for the entire lease term. (Complete all answer boxes. Round all amounts to the nearest whole dollar. Enter a "0" for any zero balances.) Requirement c. Prepare the joumal entries necessary for Burch Motors on January 1, 2018, and on December 31, 2018. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin by preparing the entry that the lessor will make on the lease commencement date. Exclude the first annual lease payment from this entry. We will record that payment in the next step. (Prepare a compound entry for the sale and the transfer of the equipment.) Now prepare the entry for the first annual lease payment received on January 1, 2018. \begin{tabular}{||l|l|l|} \hline Account & \multicolumn{2}{|c|}{ January 1,2018} \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline \end{tabular} Record Burch's year-end interest accrual related to the lease on December 31,2018. Review the amortization table from Requirement b. Requirement d. Prepare the journal entries necessary for SRTB Company on January 1, 2018, and on December 31, 2018. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin by preparing the entry that the lessee will make on the lease commencement date. Exclude the first annual lease payment from this entry. We will record that payment in the next step. Now prepare the entry for the first annual lease payment made on January 1, 2018. Record SRTB's year-end interest accrual related to the lease on December 31, 2018. Review the amortization table from Requirement b. Record SRTB's entry for amortization on the leased equipment on December 31, 2018. (Round all amounts to the nearest whole dollar.) Accumulated Amortization Amortization Expense Cash Cost of Goods Sold Interest Expense Interest Payable Interest Receivable Interest Revenue Inventory of Equipment Lease Expense Lease Liability On January 1, 2018, SRTB Company leases a fleet of stock delivery vehicles from Burch Motors, Inc. More info Under the terms of the lease, SRTB must pay $55,000 on January 1 of each year, beginning on January 1, 2018, over a 4-year term. The delivery vehicles have a useful life of 4 years. SRTB depreciates similar vehicles that it owns using the straight-line method. SRTB's incremental borrowing rate is 14%, and the 5% implicit rate in the lease is known to the lessee. The vehicles cost Burch Motors $200,000 and have a fair value of $204,779. Burch has no uncertainties as to future costs and collection. The lease terms do not contain a transfer of ownership, and there is no purchase option. There is also no residual value specified in the contract because no residual value is expected at the end of the lease term by the lessor. Assume that there are neither initial direct costs nor nonlease components related to the lease agreement. Requirement b. Prepare the lease amortization table for the entire lease term. (Complete all answer boxes. Round all amounts to the nearest whole dollar. Enter a "0" for any zero balances.) Requirement c. Prepare the joumal entries necessary for Burch Motors on January 1, 2018, and on December 31, 2018. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin by preparing the entry that the lessor will make on the lease commencement date. Exclude the first annual lease payment from this entry. We will record that payment in the next step. (Prepare a compound entry for the sale and the transfer of the equipment.) Now prepare the entry for the first annual lease payment received on January 1, 2018. \begin{tabular}{||l|l|l|} \hline Account & \multicolumn{2}{|c|}{ January 1,2018} \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline \end{tabular} Record Burch's year-end interest accrual related to the lease on December 31,2018. Review the amortization table from Requirement b. Requirement d. Prepare the journal entries necessary for SRTB Company on January 1, 2018, and on December 31, 2018. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin by preparing the entry that the lessee will make on the lease commencement date. Exclude the first annual lease payment from this entry. We will record that payment in the next step. Now prepare the entry for the first annual lease payment made on January 1, 2018. Record SRTB's year-end interest accrual related to the lease on December 31, 2018. Review the amortization table from Requirement b. Record SRTB's entry for amortization on the leased equipment on December 31, 2018. (Round all amounts to the nearest whole dollar.) Accumulated Amortization Amortization Expense Cash Cost of Goods Sold Interest Expense Interest Payable Interest Receivable Interest Revenue Inventory of Equipment Lease Expense Lease Liability