1. On January 1, 2020, Firm ABC (lessor) leased a building to Firm XYZ (lessee). The relevant information related to the lease is as follows. 1) The lease arrangement is for 3 years. 2) The building's cost and fair value at commencement of the lease is $60,000. The building is depreciated on a straight-line basis. Its estimated economic life is 5 years with salvage value of $ 12,000 at the end of the lease. The residual value after 5 years is assumed to be zero. 3) The lease contains no renewal options. The building reverts to Firm ABC at the termination of the lease. 4) The implicit rate of Firm ABC (the lessor) is 6% and is known by Firm XYZ. 5) Both the lessor and the lessee are on a calendar-year basis. (a) Prepare the journal entries that Firm XYZ should make in 2020 Date Lease Payment Interest Reduction of Lease Liability Lease Liability 1/1/2020 1/1/2020 1/1/2021 1/1/2022 (b) Prepare the journal entries that Firm ABC should make in 2020