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Exercise 15-2 (Algo) Finance lease; calculate lease payments [LO15-2] American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $5.2 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be six years with no residual value. Barton and Barton's implicit interest rate was 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Answer is not complete. Req 3 and 4 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. Complete this question by entering your answers in the tabs below. Req 1 No 1 Req 2 Req 3 and 4 Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021. (Enter your answers in whole dollars and not in millions. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. Date January 01, 2021 Right-of-use asset Lease payable General Journal Debit 5,200,000 Credit 5,200,000 Answer is not complete. Complete this question by entering your answers in the tabs below. Req 3 and 4 Prepare an amortization schedule for the four-year term of the lease. (Enter your answers in whole dollars and not in millions. Round your answers to the nearest whole dollar. Enter all amounts as positive values.) Req 1 Year Req 2 2021 2022 2023 2024 Total Lease Payments 1,712,019 1,712,019 1,712,019 1,712,019 6,848,076 Lease Amortization Schedule Decrease in Balance Effective Interest 624,000 493,438 347,208 183,430 1,648,076 1,088,019 1,218,581 1,364,811 1,528,589 5,200,000 Outstanding Balance 4,111,981 2,893,400 1,528,589 0 Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to the nearest whole dollar.) No 1 2 3 4 Date December 31, 202 Interest expense Lease payable Cash General Journal December 31, 202 Amortization expense Right-of-use asset December 31, 202 Interest expense Lease payable Cash December 31, 202 Amortization expense Right-of-use asset Reg 2 Debit 624,000 1,088,019 1,300,000 347,208 1,364,811 1,300,000 Reg 3 and 4 Credit 1,712,019 1,300,000 1,712,019 1,300,000

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