TB Problem 15-198 (Static)

Here is a lease amortization schedule for Jedi Corporation, the lessee.

Asset being leased: High-speed R2D2 unit
Initial lease obligation	??
Annual lease payments	30,000	Payable at lease beginning and at beginning of each subsequent year.
Annual interest rate	??
Payments per year	1
Number of years for lease	10
Useful life of asset	12 years	No expected residual value at the end of 12 years.
Bargain purchase option	5,000	Exercisable at end of lease.

Lease Payment	Periodic Payment	Effective Interest		Decrease in Balance		Outstanding Balance
						??
1	30,000	??		??		181,970
2	30,000	16,377		13,623		168,347
3	30,000	15,151		14,849		153,498
4	30,000	13,815		16,185		137,313
5	30,000	12,358		17,642		119,671
6	30,000	10,770		19,230		100,441
7	30,000	9,040		20,960		79,481
8	30,000	7,153		22,847		56,634
9	30,000	5,097		24,903		31,731
10	??	??		??		??
11	??	413		4,587		??

Total interest over term of lease ?? Annual straight-line amortization on the right-of-use asset ?? Required: (a) Calculate the effective interest and the decrease in balance for the first lease payment. (b) Calculate the initial lease obligation above. (c) Calculate the annual amortization amount. (d) Calculate the annual interest rate. (e) Calculate the missing amounts for rows for payments 10 and 11. (f) Calculate the total effective interest over the term of the lease.

Calculate the effective interest and the decrease in balance for the first lease payment. Calculate the initial lease obligation above. Calculate the annual amortization amount. Calculate the annual interest rate. (Round "Annual amortization amount" to nearest whole dollar amount and round your "Annual interest rate" to the nearest whole number.)

(a)	Effective interest for the first lease payment
	Decrease in balance
(b)	Initial lease obligation
(c)	Annual amortization amount
(d)	Annual interest rate		%

Calculate the missing amounts for rows for payments 10 and 11. (Round your answers to the nearest whole dollar amounts.)

Lease Payment	Periodic Payment	Effective Interest	Decrease in Balance	Outstanding Balance
1	30,000			181,970
2	30,000	16,377	13,623	168,347
3	30,000	15,151	14,849	153,498
4	30,000	13,815	16,185	137,313
5	30,000	12,358	17,642	119,671
6	30,000	10,770	19,230	100,441
7	30,000	9,040	20,960	79,481
8	30,000	7,153	22,847	56,634
9	30,000	5,097	24,903	31,731
10
11		413	4,587

Calculate the total effective interest over the term of the lease. (Round your answer to the nearest whole dollar amounts.)

Total effective interest