Chapter 18, Problem 18.5P

Classification as Finance or Operating Lease, Lessor, Journal Entries, Sales-Type Lease, Guaranteed Residual Value. Using the same information as found in P18-4, assume that the lease contains a guaranteed residual value of $15,000. The lessee guarantees the residual value.

Required

1. a. Compute the annual rent payment needed to ensure that the lessor company recovers the fair value of the vehicles.
2. b. Compute the present value of the lease payments using this new payment (exclude the guaranteed residual value from this part of the problem).
3. c. Prepare the amortization table required for the entire term. Use the new payment and guaranteed residual value.