5. (5 points) Monterey Corporation leases a machine from Dorris Rentals Co. on January 1, 2021. The following data pertain to the agreement: a. The term of the noncancelable lease is 3 years with no renewal option. Payments of $574,864 are due on December 31st of each year. b. The machine has a book value of $840,000 on Dorris Rentals' books on January 1, 2021. The machine has a remaining economic life of 5 years, with no salvage value. The machine reverts to the lessor upon the termination of the lease. Monterey and Dorris depreciates all machinery on a straight-line basis. d. Monterey's incremental borrowing rate is 10% per year. Monterey does not have knowledge of the 8% implicit rate used by Dorris. Required: Suppose this is an operating lease for Dorris. Please prepare the journal entries for Dorris for year 2021 (show computation; indicate the date for each journal entry clearly). 6. (6 points) Rocklin Corporation enters into an agreement with Orinda Rentals Co. on December 31, 2021 for the purpose of leasing a machine to be used in its manufacturing operations. The following data pertain to the agreement: (a) The term of the noncancelable lease is 8 years with no renewal option. Payments of $344,152 are due on December 31 of each year, and the first payment occurs on December 31, 2021. (b) Rocklin's incremental borrowing rate is 10% per year, but Rocklin is aware of the 8% implicit rate used by Orinda. (c) There is no residual value. Required: What is the amount of the reduction in the lease liability for Rocklin Corp. on December 31, 2023 of the lease? (Show computation.)