[oneji]

All store operations are conducted from leased premises. These leases generally provide for base rentals and the payment of a percentage of sales as additional rent when sales exceed specified levels. Minimum rentals relating to these leases are recorded on straight line basis. In addition the company is typically responsible under its leases for common area maintenance charges, real estate taxes and certain other expenses. These leases are classified as operating leases.

Rent expense charged to operations including amounts paid under short-term cancelable leases was as follows:

Year 2000 minimum rentals= 66437 year 2000 contingent rentals=10736 year 2000 totals=77173
Year 1999 min rentals= 53482 year 1999 contingent rentals=6177 year 1999 total 59659
Year 1998 min rentals=47421 year 1998 contingent rentals=1725 year 1998 total=49146

Table below summarizes future minimum lease obligations under operating leases in effect at jan 29 1000:
Future minimum lease obligations=

2000 = 54483
2001 = 51083
2002 = 48851
2003 = 48058
2004 = 43238
thereafter=157602
total =403315

QUESTION 1: Assuming that this is the only available information relating to its leasing activities, what amount does company report on its balance sheet jan 29 2000 for its lease obligations?

QUESTION 2: Assume that company paid all rent jan 29 2000 for the fiscal year ending jan 29, 2000. What was the journal entry to record leases in their accounting records?

QUESTION 3: Show how this affects the financial statements by recording the above entry in the financial statement effects template:

QUESTION 4 What effect has its lease classification as operating had on companies balance sheet compared to if they had recorded their leases as capital leases?

QUESTION 5: Over the life of its leases, what effect does this lease classification have on its net income?

Thank you!