On January 1, 2015, Joey Co. leased a color copier from Legoria Corp. The color copier had a fair market value of $479,079. The lease agreement specifies annual payments beginning January 1, 2013, the inception of the lease, in the amount of $92,931. The lease term is 6 years and the economic life of the color copier is 7 years. At the end of the 6 year lease term, the Color copier is expected to have a residual value of $60,000, which is guaranteed by the Lessee. Joey Co's incremental borrowing rate is 10% and Legoria Corp's implicit rate is unknown by Joey Co.
(1) What type of Lease is this for Joey Co.? Show support for your answer
(2) Compute the Present value of the Minimum Lease payments (Show support for your answer, if you use calculator, document what you entered into the calculator
(3) Prepare the journal entries for Joey Co. (Lessee) for the period from January 1, 2015 (inception of the lease) through January 1, 2016 (the 2nd Lease payment).