Prepare an Amortization Schedule

Lease Term $($in years$)3$

quaterly rental payments $($paid at the beginning of each quarter$)$ $$30,000$

effective interest rate $12\%$

Present value of Lease payments $307579$

PaymentDate LeasePayments EffectiveInterest DecreaseinBalance Leasebalance

$307,579$

$01/01/$Y$1$ $$30,00000277,579$

$04/01/$Y$1$ $$30,0008,32721,673255,906$

$07/01/$Y$1$ $$30,0007,67722,323233,583$

$10/01/$Y$1$ $$30,0007,00722,993210,591$

$01/01/$Y$2$ $$30,0006,31823,682186,908$

$04/01/$Y$2$ $$30,0005,60724,393162,516$

$07/01/$Y$2$ $$30,0004,87525,125137,391$

$10/01/$Y$2$ $$30,0004,12225,878111,513$

$01/01/$Y$3$ $$30,0003,34526,65584,858$

$04/01/$Y$3$ $$30,0002,54627,45457,404$

$07/01/$Y$3$ $$30,0001,72228,27829,126$

$10/01/$Y$3$ $$30,00087429,1260$

total $$360,000$ $$52,421$ $$277,579$

Based on the amortization schedule, please answer the following questions:

Q$1$: what is the lessee's lease expense in Y$1$ if this is an operating lease?

Q$2$: what is the lessee's interest expense in Y$1$ if this is an operating lease?

Q$3$: what is the lessee's amortization expense related to the right of use assets in Y$1$ if this is an operating lease?

Q$4$: what is the lessee's amortization expense related to the right of use assets in Y$3$ if this is an operating lease?

Q$5$: Prepare the journal entry for the lessor on $01/01/$Y$1$ if this is an operating lease

Q$6$: Prepare the journal entry for the lessor on $04/01/$Y$2$ if this is an operating lease$($ignore the depreciation expense$)$

Q$7$: Prepare the journa

Sensitivity Analyse

Lease balance Lease balance

at $01/01/$Y$1$ at $07/01/$Y$3$

$($after the lease payment$)($after the lease payment$)$

the quaterly lease payments is

$7000$ and the effective interest rate is $9\%$:

the quaterly lease payments is $24000$

and the effective interest rate is $12\%$: