Windsor Company leases an automobile with a fair value of $20,235 from John Simon Motors, Inc., on the following terms: 1. 2. 3. Non-cancelable term of 50 months. Rental of $420 per month (at the beginning of each month). (The present value at 0.5% per month is $18,633.) Windsor guarantees a residual value of $1,550 (the present value at 0.5% per month is $1.208). Windsor expects the probable residual value to be $1,550 at the end of the lease term. Estimated economic life of the automobile is 60 months. Windsor's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. 4. 5. a Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) What is the nature of this lease to Windsor? lease. The nature of this lease is a/an Based on the original fact pattern, record the lease on Windsor'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 Lease Expense 420 1 420