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P21.9B (L0 2,4) GROUPWORK (Lessor Computations and Entries, Sales-Type Lease with Unguaranteed Residual Value) Atlas Company manufactures a fast-food kiosk with an estimated economic life of 10 years and leases it to Rodeo Chicken for a period of 9 years. The normal selling price of the equipment is $172,842, and its unguaranteed residual value at the end of the lease term is estimated to be $25,009. Rodeo will pay annual payments of $21,000 at the beginning of each year. Atlas incurred 4 Chapter 21A Accounting for Leases costs of $143,000 in manufacturing the equipment and $2,500 in sales commissions in closing the lease. Atlas has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%. P21.10B (L0 2,4) (Lessee Computations and Entries, Finance Lease with Unguaranteed Residual Value) Assume the same data as in P21.9B, with Rodeo Chicken having an incremental borrowing rate of 5%. Instructions (Round all numbers to the nearest dollar.) (a) Discuss the nature of this lease in relation to the lessee, and compute the amount of the initial lease liability. (b) Prepare a 9-year lease amortization schedule. (c) Prepare all of the lessee's journal entries for the first year. Assume straight-line depreciation

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