Kingbird Company leases an automobile with a fair value of $10,297 from John Simon Motors, Inc., on the following terms: 1. Non-cancelable term of 50 months. 2. Rental of $210 per month (at the beginning of each month). (The present value at 0.5% per month is $9,317.) 3. Kingbird guarantees a residual value of $1,000 (the present value at 0.5% per month is $779). Kingbird expects the probable residual value to be $1,000 at the end of the lease term. 4. Estimated economic life of the automobile is 60 months. 5. Kingbirds incremental borrowing rate is 6% a year (0.5% a month). Simons implicit rate is unknown. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Correct answer. Your answer is correct. What is the nature of this lease to Kingbird? The nature of this lease is a/an Entry field with correct answer lease. SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Incorrect answer. Your answer is incorrect. Try again. What is the present value of the lease payments to determine the lease liability? (Round answer to 0 decimal places, e.g. 5,275.) Present value of the lease payments $Entry field with incorrect answer now contains modified data SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Partially correct answer. Your answer is partially correct. Try again. Based on the original fact pattern, record the lease on Kingbirds books at the date of commencement. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Entry field with correct answer Right-of-Use Asset Entry field with incorrect answer now contains modified data Entry field with correct answer Entry field with correct answer Lease Liability Entry field with correct answer Entry field with incorrect answer now contains modified data SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Correct answer. Your answer is correct. Record the first months lease payment (at commencement of the lease). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit Entry field with correct answer Lease Liability Entry field with correct answer 210 Entry field with correct answer Entry field with correct answer Cash Entry field with correct answer Entry field with correct answer 210 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Partially correct answer. Your answer is partially correct. Try again. Record the second months lease payment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit Entry field with correct answer Lease Liability Entry field with incorrect answer now contains modified data Entry field with correct answer Entry field with correct answer Interest Expense Entry field with incorrect answer now contains modified data Entry field with correct answer Entry field with correct answer Cash Entry field with correct answer Entry field with correct answer 210 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Partially correct answer. Your answer is partially correct. Try again. Record the first months amortization on Kingbirds books (assume straight-line). (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.25.) Account Titles and Explanation Debit Credit Entry field with incorrect answer Depreciation Expense Entry field with incorrect answer Entry field with correct answer Entry field with incorrect answer Accumulated Depreciation-Capital Leases Entry field with correct answer Entry field with incorrect answer SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Incorrect answer. Your answer is incorrect. Try again. Suppose that instead of $1,000, Kingbird expects the residual value to be only $500 (the guaranteed amount is still $1,000). How does the calculation of the present value of the lease payments change from part (b)? (Round answer to 0 decimal places, e.g. 5,275.) PV of lease payments $Entry field with incorrect answer now contains modified data