On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are mad

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On January 1 2021 Majestic Mantles Leased A Lathe From Equipment Leasing Under A Finance Lease Lease Payments Are Mad 1 (42.77 KiB) Viewed 8 times

On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portions of the Equipment Leasing's lease amortization schedule appear below: Jan. 1 2021 2022 2023 2024 2025 2026 2027 2038 2039 2040 Payments 21,000 21,000 21,000 21,000 21,000 21,000 21,000 21,000 21,000 21,000 Effective Decrease in Outstanding Interest Balance Balance 16,916 16,548 16, 147 15,711 15,235 14,716 4,784 3,325 1,734 21,000 4,084 1. Lease liability 2. Right-of-use asset 3. Lease term 4. Effective annual interest rate 5. Total of lease payments 6. Total effective interest expense 4,452 4,853 5,289 5,765 6,284 16,216 17,675 19,266 208,952 187,952 183,868 179,416 174,563 169, 274 163,509 157,224 36,940 19,264 0 Required: 1. What is Majestic's lease liability after the first lease payment?? 2. What amount would Majestic record as a right-of-use asset? 3. What is the lease term in years? 4. What is the effective annual interest rate? (Round your percentage answers to 1 decimal place.) 5. What is the total amount of lease payments? 6. What is the total effective interest expense recorded over the term of the lease? years %