Company A is a car manufacturer. On January 1, Year 1, Company Aleased a...

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Company A is a car manufacturer. On January 1, Year 1, Company Aleased a car to Company B for an 8-year period. The lease isappropriately accounted for as a sales-type lease by Company A. Theuseful life of the car is 10 years, and its carrying amount inCompany A's financial statements was $100,000. The eight annualequal lease payments of $19,870 are payable at the end of eachyear, starting December 31, Year 1. The interest rate implicit inthe lease is 10%. The fair value of the car at the inception of thelease equals the present value of the minimum lease payments. Atthe end of the lease term, Company B guarantees a residual value of$30,000. Information on present value factors is as follows:Present value of $1 at 10% for 8 periods 0.4665 Present value of anordinary annuity of $1 at 10% for 8 periods 5.33493 CompleteCompany A's sales-type lease sheet using the information above.Enter the appropriate amounts in the shaded cells below. Enter allamounts as positive values. Round all amounts to the nearestdollar. If no entry is necessary, enter a zero (0)
1. The net investment in the lease account recognized by CompanyA on January 1, Year 1.
2. The amount of gross profit on the sale recognized by CompanyA in Year 1.
3. Total amount of interest income that Company A will earn overthe lease period.
4. The amount of interest income on the lease recognized byCompany A in year 1.
5. the amount of net investment in the lease account reported incompany A's 12/31/Year1 balance sheet.
6. The amount of interest income on the lease recognized byCompany A in year 2.

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In: AccountingCompany A is a car manufacturer. On January 1, Year 1, Company Aleased a car...Company A is a car manufacturer. On January 1, Year 1, Company Aleased a car to Company B for an 8-year period. The lease isappropriately accounted for as a sales-type lease by Company A. Theuseful life of the car is 10 years, and its carrying amount inCompany A's financial statements was $100,000. The eight annualequal lease payments of $19,870 are payable at the end of eachyear, starting December 31, Year 1. The interest rate implicit inthe lease is 10%. The fair value of the car at the inception of thelease equals the present value of the minimum lease payments. Atthe end of the lease term, Company B guarantees a residual value of$30,000. Information on present value factors is as follows:Present value of $1 at 10% for 8 periods 0.4665 Present value of anordinary annuity of $1 at 10% for 8 periods 5.33493 CompleteCompany A's sales-type lease sheet using the information above.Enter the appropriate amounts in the shaded cells below. Enter allamounts as positive values. Round all amounts to the nearestdollar. If no entry is necessary, enter a zero (0)1. The net investment in the lease account recognized by CompanyA on January 1, Year 1.2. The amount of gross profit on the sale recognized by CompanyA in Year 1.3. Total amount of interest income that Company A will earn overthe lease period.4. The amount of interest income on the lease recognized byCompany A in year 1.5. the amount of net investment in the lease account reported incompany A's 12/31/Year1 balance sheet.6. The amount of interest income on the lease recognized byCompany A in year 2.