ALL LEASES BELOW ARE BETWEEN LUNA AND JACK A. On January 1, 2021, Jack leased office space from Luna under a 20-year operating lease agreement. Luna's borrowing rate is 5%. The lease calls for annual lease payments of $10,000 on January 1 of each year. Record all journal entries related to the lease for 2021, 2022, and 2023 for both Luna and Jack. B. On January 1, 2021, Jack leased a catnip processing factory for a 4-year period ending December 31, 2024, at which time possession of the machine will revert back to Luna. Jack intends to use the machine to make catnip-filled mice so that cats around him will chill out and he can nap peacefully in the afternoon. The machine cost Luna $450,000 and has an expected useful life of 5 years. Luna expects the residual value to be $55,000 at the end of the lease. Jack told Luna that he would try to assure that this residual value is met. Annual payments of $161,150.00 are due every January 1. Luna's expected rate of return on the lease is 5%, which Jack does not know. Jack's incremental borrowing rate is 8%. Luna and Jack use straight line depreciation. Prepare the amortization schedules and all journal entries for both Luna and Jack. C. On January 1, 2021, Jack leased a warehouse from Luna. The lease specified annual payments of $15,000 beginning January 1, 2021, and each January 1 through 2024. Luna's rate for determining payments was 12%. At the end of the lease, the warehouse was expected to be worth $5,000. The estimated life of the warehouse is 5 years with no salvage value used in depreciation calculations. Luna and Jack use straight-line depreciation. + Jack guaranteed a residual value of $2,500. Jack's incremental borrowing rate is 8%. A $800 per year cleaning agreement was arranged for the warehouse with an outside service firm. During contract negotiations, Luna agreed to pay this fee and included it in the $15,000 lease payment. 1. How should this lease be classified by Luna and by Jack and why?- 2. Prepare the amortization schedule and all journal entries for Luna. 3. Prepare the amortization schedule and all journal entries for Jack