On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing’s lease amortization schedule appear below: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance 2021 243,270 2021 22,000 22,000 221,270 2022 22,000 17,702 4,298 216,972 2023 22,000 17,358 4,642 212,330 2024 22,000 16,986 5,014 207,316 2025 22,000 16,585 5,415 201,901 2026 22,000 16,152 5,848 196,053 — — — — — — — — — — — — — — — 2038 22,000 7,274 14,726 76,198 2039 22,000 6,096 15,904 60,294 2040 22,000 4,824 17,176 43,118 2041 46,567 3,449 43,118 0 Required: 4. What is the total amount of lease payments for United? (Round your answers to nearest whole dollar.) 6. What is United’s net investment at the beginning of the lease (after the first payment)? (Round your answers to nearest whole dollar.)
On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing’s lease amortization schedule appear below: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance 2021 243,270 2021 22,000 22,000 221,270 2022 22,000 17,702 4,298 216,972 2023 22,000 17,358 4,642 212,330 2024 22,000 16,986 5,014 207,316 2025 22,000 16,585 5,415 201,901 2026 22,000 16,152 5,848 196,053 — — — — — — — — — — — — — — — 2038 22,000 7,274 14,726 76,198 2039 22,000 6,096 15,904 60,294 2040 22,000 4,824 17,176 43,118 2041 46,567 3,449 43,118 0 Required: 4. What is the total amount of lease payments for United? (Round your answers to nearest whole dollar.) 6. What is United’s net investment at the beginning of the lease (after the first payment)? (Round your answers to nearest whole dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing’s lease amortization schedule appear below: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
| Jan. 1 | Payments | Effective Interest | Decrease in Balance | Outstanding Balance | ||||
| 2021 | 243,270 | |||||||
| 2021 | 22,000 | 22,000 | 221,270 | |||||
| 2022 | 22,000 | 17,702 | 4,298 | 216,972 | ||||
| 2023 | 22,000 | 17,358 | 4,642 | 212,330 | ||||
| 2024 | 22,000 | 16,986 | 5,014 | 207,316 | ||||
| 2025 | 22,000 | 16,585 | 5,415 | 201,901 | ||||
| 2026 | 22,000 | 16,152 | 5,848 | 196,053 | ||||
| — | — | — | — | — | ||||
| — | — | — | — | — | ||||
| — | — | — | — | — | ||||
| 2038 | 22,000 | 7,274 | 14,726 | 76,198 | ||||
| 2039 | 22,000 | 6,096 | 15,904 | 60,294 | ||||
| 2040 | 22,000 | 4,824 | 17,176 | 43,118 | ||||
| 2041 | 46,567 | 3,449 | 43,118 | 0 | ||||
Required:
4. What is the total amount of lease payments for United? (Round your answers to nearest whole dollar.)
6. What is United’s net investment at the beginning of the lease (after the first payment)? (Round your answers to nearest whole dollar.)
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