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Rhone-Metro Industries manufactures equipment that is sold or leased on December 31, 2021, Rhone-Metro leased equipment to Western Soya Co for a noncancelable stated lease term of four years ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $280,000 to manufacture and has an expected useful life of six years. Its normal sales price is $322.446. The expected residual value of $40,000 at December 31, 2025, is not guaranteed Western Soya Co is reasonably certain to exercise a purchase option on December 30, 2024. at an option price of $10,000. Equal payments under the lease are $137.000 (including $4.000 annual maintenance costs and are due on December 31 of each year. The first payment was made on December 31, 2021 Western Soya's incremental borrowing rate is 10% Western Soya knows the interest rate implicit in the lease payments is 8%. Both companies use straight-ine amortization Hint. A lease term ends for accounting purposes when an option becomes exercisable if it's expected to be exercised (le, a BPO) (FV of St. PV of S1, EVA of 5). PVA OTS. EVAD or S1 and PVAD 0151 (Use appropriate factore) from the tables provided.) Required: 1. Show how Rhone-Metro calculated the $117.000 annual ease payment 2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lesson)? 3. Prepare the appropriate entries for both Western Soya Co and Rhone-Metro on December 31, 2021 4. Prepare an amortization schedules) describing the pattern of interest over the lease term for the lessee and the lesson 5. Prepore the appropriate entries for both Western Soyo and Roone Metro on December 31, 2022 the second rent payment and amortization 6. Prepare the appropriate entries for both Western Soya ong Rhone-Metre on December 30, 2024 assuming the purchase ctions exercised on that date Complete this question by entering your answers in the tabs below. Required Seguired 2 Pequired 3 Required 3 Required Les Laste LU Required Red Let La Required Reguled Required La Les Lesso Showhowhore-Matro calculated the $117.000 annual paymente no finalmente Whose gollar PO Price Gato Pre Value Rhone-Metro Industries manufactures equipment that is sold or leased on December 31, 2021, Rhone Metro leased equipment to Western Soya Co. for a noncancelable stated lease term of four years ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $280,000 to manufacture and has an expected useful life of sex years. Its normal sales price is $322.446. The expected residual value of $40,000 at December 31, 2025, is not guaranteed. Western Soya Co. is reasonably certain to exercise a purchase option on December 30, 2024, at an option price of $10,000 Equal payments under the lease are $117.000 (including $4,000 annual maintenance costs) and are due on December 31 of each year. The first payment was made on December 31, 2021. Western Soya's Incremental borrowing rate is 10%. Western Soya knows the interest rate Implicit in the lease payments is 8%. Both companies use straight-line amortization Hint: A lease term ends for accounting purposes when an option becomes exercisable if it's expected to be exercised t.e. a PO, EV of $1. PV of $1. EVA of $1. PVA O $1. FVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) Required: 1. Show how Rhone-Metro calculated the $117.000 annual lease payments 2. How should this lease be classified (a) by Western Soya Co the lessee) and (b) by Rhone-Metro Industries the lesson 3. Prepare the appropriate entries for both Western Soya Co, and Rhone-Metro on December 31, 2021 4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lectee and the lesso 5. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2022 (the second tent payment and amortizations 6. Prepare the appropriate entries for both Western Soya and Rhone Metro on December 30, 2024. Umong the purchase options exercised on that date. Complete this question by entering your answers in the tabs below. Record 4 LO Resulted 5 Les Required 5 Required Require Lenor Required 2 Required 3 Baguired 3 Required Lessor Shkenculated the Scenes intermediate and finale BEDRE . Prepare the appropriate entries for both Western Soya and Rhone-Metro on Dec exercised on that date. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 3 Required 4 Required 4 Required 5 Lessee Lessor Lessee Lessor Lessee Show how Rhone-Metro calculated the $117,000 annual lease payments. (Round your in nearest whole dollar. BPO Price Table or calculator function: Present Value Amount to be recovered Amount to be recovered through period lease payments Lease Payments Lease Payments Seyments at the beginning of each of the Lease payments including O a 2. How should this lease be classified (a) by Western Soya Co. (the lessee) 3. Prepare the appropriate entries for both Western Soya Co. and Rhone- 4. Prepare an amortization schedule(s) describing the pattern of Interest oL 5. Prepare the appropriate entries for both Western Soya and Rhone-Metro amortization) 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro exercised on that date. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Lessee Required 3 Lessor Required 4 Lessee Required 4 Lesser Rec L Prepare an amortization schedule(s) describing the pattern of interest over the Intermediate and final answers to nearest whole dollar. Enter all amounts as pos Lease Amortization Schedule Effective Deorease in Payments Interest Balance Outstanding Balance Dec 31 2022 2024 Rred 4 Less Ruired 5 Les 2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by R 3. Prepare the appropriate entries for both Western Soya Co. and Rhone-Metro on Dec 4. Prepare an amortization schedule(s) describing the pattern of Interest over the lease 5. Prepare the appropriate entries for both Western Soya and Rhone-Metro on Decemb amortization). 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on Decemt exercised on that date. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Lessee Required 3 Lessor Required 4 Lessee Required 4 Required 5 Lessor Lessee Rec Prepare the appropriate entries for Western Soya Co. on December 31, 2022 (the second re required for a transaction/event, select "No journal entry required in the first account fleld. Round your final answers to the nearest whole dollar amount.) View transaction ist Journal entry worksheet 2 Record amortization expense in the books of lessee, Enter debita berrecht Date General Journal Debit Credit December 31, 2022 zation) bare the appropriate entries for both Western Soya and Rhone-Metro on Dec sed on that date. mplete this question by entering your answers in the tabs below. uired 1 Required 2 Required 3 Lessee Required 3 Lessor Required 4 Lessee Required 4 Lessor Required 5 Lessee pare the appropriate entries for Western Soya Co. on December 30, 2024, assuming entry is required for a transaction/event, select "No journal entry required" in the fire I answers to nearest whole dollar.) w transaction list Journal entry worksheet 1 2 3 4 5 Record amortization estpense in the books of lessee. Notenter det bare credit Date General ournal Debit Credit December 31, 2024

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