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Teal Mountain Company leases an automobile with a fair value of $15,005 from John Simon Motors, Inc., on the following terms: Non-cancelable term of 50 months.. Rental of $300 per month (at the beginning of each month). (The present value at 0.5% per month is $13,310.) Teal Mountain guarantees a residual value of $1,800 (the present value at 0.5% per month is $1.403). Teal Mountain expects the probable residual value to be $1,800 at the end of the lease term. Estimated economic life of the automobile is 60 months. Teal Mountain's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. 1. 2₁ 3. 4. 5. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Teal Mountain Company leases an automobile with a fair value of $15,005 from John Simon Motors, Inc., on the following terms: Non-cancelable term of 50 months.. Rental of $300 per month (at the beginning of each month). (The present value at 0.5% per month is $13,310.) Teal Mountain guarantees a residual value of $1,800 (the present value at 0.5% per month is $1.403). Teal Mountain expects the probable residual value to be $1,800 at the end of the lease term. Estimated economic life of the automobile is 60 months. Teal Mountain's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. 1. 2₁ 3. 4. 5. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Teal Mountain Company leases an automobile with a fair value of $15,005 from John Simon Motors, Inc., on the following terms: Non-cancelable term of 50 months. Rental of $300 per month (at the beginning of each month). (The present value at 0.5% per month is $13,310.) Teal Mountain guarantees a residual value of $1,800 (the present value at 0.5% per month is $1,403). Teal Mountain expects the probable residual value to be $1,800 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months, 5. Teal Mountain's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. 1. 2₁ 3. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor t (a) Your answer is correct. What is the nature of this lease to Teal Mountain? The nature of this lease is a/an finance lease. e provided.)
Transcribed Image Text:Teal Mountain Company leases an automobile with a fair value of $15,005 from John Simon Motors, Inc., on the following terms: Non-cancelable term of 50 months. Rental of $300 per month (at the beginning of each month). (The present value at 0.5% per month is $13,310.) Teal Mountain guarantees a residual value of $1,800 (the present value at 0.5% per month is $1,403). Teal Mountain expects the probable residual value to be $1,800 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months, 5. Teal Mountain's incremental borrowing rate is 6% a year (0.5% a month). Simon's implicit rate is unknown. 1. 2₁ 3. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor t (a) Your answer is correct. What is the nature of this lease to Teal Mountain? The nature of this lease is a/an finance lease. e provided.)
(e) Record the second month's lease payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit
Transcribed Image Text:(e) Record the second month's lease payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit
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