Assume that on January 1, 2021, Sage Hill Corporation sells equipment to Oriole Finance Co. for $1,780,000 and immediately leases back the equipment. The relevant information is as follows.

1.		The equipment was carried on Sage Hills books at a value of $1,570,000.
2.		The term of the non-cancelable lease is 3 years; title will not transfer to Sage Hills, and the expected residual value at the end of the lease is 1,177,500, all of which is unguaranteed.
3.		The lease agreement requires equal rental payments of $290,590 at the beginning of each year.
4.		The incremental borrowing rate for Sage Hill is 9%. Sage Hill is aware that Oriole Finance set the annual rental to ensure a rate of return of 9%.
5.		The equipment has a fair value of $1,780,000 on January 1, 2021, and an estimated economic life of 10 years.

Click here to view factor tables.

Prepare the journal entries for both the lessee and the lessor for 2021 to reflect the sale and leaseback agreement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
Sage Hill Corporation (Seller-Lessee)
1/1/2112/31/21
	(To record sale)
1/1/2112/31/21
	(To record lease)
1/1/2112/31/21
	(To record first lease payment)
1/1/2112/31/21

Date	Account Titles and Explanation	Debit	Credit
Oriole Corporation (Buyer-Lessor)
1/1/2112/31/21
	(To record purchase)
1/1/2112/31/21
	(To record lease payments)
1/1/2112/31/21
	(To record lease revenue)
1/1/2112/31/21
	(To record depreciation)