I need help with only required 6 please Amount to be recovered (fair value)Lease payments at the beginning of each of the next eight$771,147$135,000years: ($771,147+ 5.7122*)*Present value of an annuity due of $1: n = 8, i = 11%.b. Red Baron's incremental borrowing rate is 12%.c. Incremental Costs of negotiating and consummating the completed lease transaction incurred by Bidwell Leasing were $21,091.Required:1. How should this lease be classified (a) by Bidwell Leasing (the lessor) and (b) by Red Baron (the lessee)?2. Prepare the appropriate entries for both Red Baron Flying Club and Bidwell Leasing on January 1, 2021.3. Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club.4. Determine the effective rate of interest for Bidwell Leasing for the purpose of recognizing interest revenue over the lease term.5. Prepare an amortization schedule that describes the pattern of interest revenue over the lease term for Bidwell Leasing.6. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2021 (the second lease payment). Bothcompanies use straight-line depreciation.7. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2027 (the final lease payment).Answer is complete but not entirely correct.Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Required 4Required 5Required 6Required 7Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2021 (the second lease payment).Both companies use straight-line depreciation. (If no entry is required for a transaction/event, select "No journal entryrequired" in the first account field. Round your intermediate and final answers to nearest whole dollar.) 3. Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club.4. Determine the effective rate of interest for Bidwell Leasing for the purpose of recognizing interest revenue over the lease term.5. Prepare an amortization schedule that describes the pattern of interest revenue over the lease term for Bidwell Leasing.6. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2021 (the second lease payment). Bothcompanies use straight-line depreciation.7. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2027 (the final lease payment).X Answer is complete but not entirely correct.Complete this question by entering your answers in the tabs below.Required 1Required 2Required 3Required 4Required 5Required 6Required 7Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2021 (the second lease payment).Both companies use straight-line depreciation. (If no entry is required for a transaction/event, select "No journal entryrequired" in the first account field. Round your intermediate and final answers to nearest whole dollar.)NoDateGeneral JournalDebitCredit1December 31, 202 Lease payable69,976 XInterest expense65,024Cash135,0002December 31, 202 Amortization expense96,393 ORight-of-use asset96,3933December 31, 202 Cash135,000 OLease receivable69,276 VInterest revenue65,724 O

Answer- Working - Lease Payable (11% x [$771147 – 135,000])

Amount to be recovered (fair value) Lease payments at the beginning of each of the next eight years: ($771,147+ 5.7122) $771,147 $135,000 Present value of an annuity due of $1: n = 8, i = 11%. b. Red Baron's incremental borrowing rate is 12%. c. Incremental Costs of negotiating and consummating the completed lease transaction incurred by Bidwell Leasing were $21,091. Required: 1. How should this lease be classified (a) by Bidwell Leasing (the lessor) and (b) by Red Baron (the lessee)? 2. Prepare the appropriate entries for both Red Baron Flying Club and Bidwell Leasing on January 1, 2021. 3. Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club. 4. Determine the effective rate of interest for Bidwell Leasing for the purpose of recognizing interest revenue over the lease term. 5. Prepare an amortization schedule that describes the pattern of interest revenue over the lease term for Bidwell Leasing. 6. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2021 (the second lease payment). Both companies use straight-line depreciation. 7. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2027 (the final lease payment). X Answer is complete but not entirely correct.

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 6P: Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a...