Quen Naple Marked out of 100 Reporting Finance Lease, Purchase Option-Lesse On January 1 of hear 1, lessor Marcy and lessee Lenos contract for the lease of a machine for five payments of $7,000 each. The $7,000 payments are to be paid at the end of each year beginning on December 31 of veer 1. They also agree that at the time of the fifth payment for an added $6,000 purchase option paymen, Lence can buy the property, Lencx reasonably expects to excise the purchase opdon as the amount is well under the expected fair value at that time. Lenas incremental borrowing rate is o per year and Lenex is unaware of the implicit rate of the lease. The economic life of the asset is six years. Required a. How would enclay the lease b. Compute the value of the lease ability on January 1 of Ver 1. Note: Round your answer to the nearest whole dollar $0 c. Prepare a schedule of the lease ability for the first two years of the lease term Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Da Jon 1. r Dec 31, 4 Dec 31, Year 25 Incent Payment on Liby Da sene De 31. Yo 05 0$ as 05 Lease d. Prepare the entries for Lenox on (1) january 1 of sear 1, (2) December 31 of year, and (31 December 31 of Year 2 Note: Round your answers to the nearest whole d Acc Name Lease Lady $ OF 01 Tandbeated so V 0 0 0 << <<< << <<< 0 0 0 0 D D • DOD 0 0 D E 4 US a G 0 0 D D 0

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Quen Naple Marked out of 100 Reporting Finance Lease, Purchase Option-Lesse On January 1 of hear 1, lessor Marcy and lessee Lenos contract for the lease of a machine for five payments of $7,000 each. The $7,000 payments are to be paid at the end of each year beginning on December 31 of veer 1. They also agree that at t