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Monty Corporation leased equipment to Teal Mountain, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,652 at the beginning of each year of the 2-year lease. The equipment has an economic useful life of 6 years, a fair value of $8,000, a book value of $6,000, and Monty expects a residual value of $5,500 at the end of the lease term. Monty set the lease payments with the intent of earning a 7% return, though Teal Mountain is unaware of the rate implicit in the lease and has an incremental borrowing rate of 9%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

What is the amount of the rental payments used in the lease agreement? (Round answer to 0 decimal places, e.g. 5,275.) Rental payments $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

Prepare the entries for Monty for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/2012/31/20 1/1/2012/31/20 (To record the recognition of the revenue) 1/1/2012/31/20 (To record depreciation expense on the leased equipment) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

How would Montys accounting in part a change if it incurred legal fees of $600 to execute the lease documents and $500 in advertising expenses for the year in connection with the lease? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20Over the course of the year12/31/20 1/1/20Over the course of the year12/31/20 1/1/20Over the course of the year12/31/20

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