Refer to the following lease amortization schedule. The 10 payments are made annually starting with...
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Accounting
Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.
Payment
Cash Payment
Effective Interest
Decrease in balance
Outstanding Balance
101,385
1
15,000
15,000
86,385
2
15,000
8,639
6,361
80,024
3
15,000
8,002
6,998
73,026
4
15,000
7,303
7,697
65,329
5
15,000
6,533
8,467
56,862
6
15,000
5,686
9,314
47,548
7
15,000
4,755
10,245
37,303
8
15,000
3,730
11,270
26,033
9
15,000
?
?
?
10
15,000
?
?
?
What would be the outstanding balance after payment 10?
Multiple Choice
$15,000.
$0.
$13,636.
$1,364.
Answer & Explanation
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