Hayes Corp. is a manufacturer of truck trailers. On January…
Hayes Corp. is a manufacturer of truck trailers. On January 1, 2025, Hayes Corp. leases ten trailers to Lester Company under a six-year noncancelable lease agreement. The following information about the lease and the trailers is provided: Equal annual payments that are due on January 1 each year , with the first payment due at inception, provide Hayes Corp. with an 8% return on investment. The trailers revert to Hayes Corp. at the end of the lease. The fair value of each trailer is $60,000. The cost of each trailer to Hayes Corp. is $54,000. Each trailer has an expected useful life of nine years. There is an guaranteed residual value of $6,000 on each trailer. Collectibility of the lease payments is probable. Instructions: Calculate the annual lease payment. You may use Excel, a financial calculator, or the present value tables below to calculate the appropriate values. (Round to nearest dollar.) What type of lease is this for Hayes Corp.? Explain how you made the determination. Prepare a lease amortization schedule for Hayes Corp. covering the entire lease term. (Round to the nearest dollar.) Prepare the journal entries for Hayes Corp. to record the lease activity for 2025.