Question

i need help knowing how to correct what i got wrong! thanks!

previous attempt. 4 Problem 15-10 (Algo) Sales-type lease; purchase option reasonably certain to be exercised before lease term ends; lessor and lessee (LO15-3, 15-6) 25 awarded -Mid-South Auto Leasing leases vehicles to consumers. The attraction to customers is that the company can offer competitive prices due to volume buying and requires an interest rate implicit in the lease that is one percent below alternate methods of financing. On September 30, 2021, the company leased a delivery truck to a local florist, Anything Grows. The fiscal year for both companies ends December 31 ored The lease agreement specified quarterly payments of $7000 beginning September 30, 2021, the beginning of the lease, and each quarter December 31, March 31, and June 30) through June 30, 2024 (three-year lease term). The florist had the option to purchase the truck on September 29, 2023, for $14,000 when it was expected to have a residual value of $19,500. The estimated useful life of the truck is four years. Mid-South Auto Leasing's quarterly interest rate for determining payments was 2% (approximately 8% annually). Mid-South paid $60,000 for the truck. Both companies use straight-line depreciation or amortization. Anything Grows' incremental interest rate is 8% Hint A lease term ends for accounting purposes when an option becomes exercisable if it's expected to be exercised (le, a BPO). (EV of $1. PV of $1 A of $1. PVA of $1. FVAD of $1 and PVAD of S1 (Use appropriate factor(s) from the tables provided) Required: 1. Calculate the amount of selling profit that Mid-South would recognize in this sales-type lease. (Be careful to note that, although payments occur on the last calendar day of each quarter, since the first payment was at the beginning of the lease, payments represent an annuity due.) 2. Prepare the appropriate entries for Anything Grows and Mid-South on September 30, 2021. 3. Prepare an amortization schedule(s) describing the pattern of interest expense for Anything Grows and interest revenue for Mid- South Auto Leasing over the lease term. 4. Prepare the appropriate entries for Anything Grows and Mid-South Auto Leasing on December 31, 2021. 5. Prepare the appropriate entries for Anything Grows and Mid-South on September 29, 2023, assuming the purchase option was exercised on that date Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5

Answer 1

No	Date	General Journal	Debit	Credit
1	Sep 29	Amortization expense	4,016
		Right-of-use asset		4,016
		(64,253/4 x 1/4)
2	Sep 29	Interest expense	274
		Lease payable	13,726
		Cash		14,000
3	Sep 29	Cash	14,000
		Lease receivable		13,726
		Interest revenue		274