Lshiri Lessing purchased a single$-$engine plane for $$530,000$ and lessed it to Red Boron Flying Club for its fair value of $$999,635$ on Jsnusry $1,2024.$

Note: Use tables, Excel, or a financlal calculator. $($EV of $$1.$ PV of $$1.$ FVA of $$1.$ PVA of $$1.$ FVAD of $$1$ and PVAD of $$1)$

Terms of the lesse agreement and related focts were

a$.$ Eight annusl psyments of $$175,000$ beginning Janusry $1,2024,$ the beginning of the lease, and on each December $31$ through $2030.$ Red Boron knows that Lahiri Lessing's implicit interest rate was $11\%.$ The estimated useful life of the plane is eight years. Payments were calculsted os follows:

Amount to be recovered $($fair value$)$

Lease payments at the beginning of each of the next eight years

$$999,635$

$($$$999,635$~~$5\mathrm{.}7122)$

$ $175,$ eee

$*$Present value of an annuity due of $$1$:$n=8,i=11\%$

b$.$ Red Baron's incrementol borrowing rate is $12\%$

c$.$ Incremental costs of consummating the completed lease transaction incurred by Lahiri Lessing were $$27,339.$

Required:

How should this lease be clessified $($a$)$ by Lohiri Leasing $($the lessor$)$ and $($b$)$ by Red Baron $($the lessee$)?$

$2$ Prepare the appropriste entries for both Red Boron Flying Club and Lahiri Leasing on January $1,2024$

Prepare an amortization schedule that describes the pottern of interest expense over the lease term for Red Boron Flying Club.

Prepare the appropriste entries for both Red Boron and Lahiri Lessing on December $31,2024($the second lease poyment$).$ Both componies use straight$-$line depreciotion or amortization.

Prepare the appropriste entries for both Red Baron and Lahiri Leasing on December $31,2030($the final lease poyment$).$

Complete this question by entering your answers in the tabs below.

Required $1$

Required $2$

Required $3$

Required $4$

Required $5$

Prepare the appropriate entries Tor Loth Red Baron and Lahiri Leasing or December $31,2030($the final lease payment$).$ Note: If no entry is required for a transection$/$event$,$ select $"$No journal entry required" in the first account rield. Round your intermediate and final answers to nearest whate dollar.

Journal entry worksheet

$1$

$(2)$

$(3)$

Record the lease payment for Red Baran Fiying Qlub.

Note: Encer det tefore cresie:

$\backslash$table$[[$Date$,$General Journal,Deblt,Crealt$],[$December $31,2030,,,],[,,,],[,,,],[,,,],[,,,]]$