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Assume that the following facts pertain to a non-cancelable lease agreement between Fifth-Third Leasing Company and Bob Evans Farms, a lessee. Inception date January 1 2014 Annual lease payment due at the beginning of each year, beginning with January 1, 2014 $81,365 Residual value of equipment at end of lease term, guaranteed by the lessee $50,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, 2014 $400,000 Lessors implicit rate 12% Lessees incremental borrowing rate 12% The lessee assumes responsibility for all executory costs, which are expected to amount to $4,000 per year. The asset will revert to the lessor at the end of the lease term. The lessee has guaranteed the lessor a residual value of $50,000. The lessee uses the straight-line depreciation method for all equipment. 1. Using the Excel Template spreadsheet below, prepare an amortization schedule that would be suitable for the lessee for the lease term. 2. Prepare the journal entries for the lessee for 2014 and 2015 to record the lease agreement and all expenses related to the lease. Record them clearly in that spreadsheet. Assume the lessees annual accounting period ends on December 31 and that reversing entries are used when appropriate. Bob Evans Farms - Lease Amortization Schedule Date Lease Payment / Executory Costs / Interest Expense / Reduction of Lease Liability / Balance of Lease Liability January 1 2014 $400,000 January 1 2014 January 1 2015 January 1 2016 January 1 2017 January 1 2018 January 1 2019 December 31 2019

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