Blossom Company, as lessee, enters into a lease agreement on July 1, 2021, for equipment. The following data are relevant to the lease agreement:

1.		The term of the noncancelable lease is 4 years, with no renewal option. Payments of $880,698 are due on July 1 of each year.
2.		The fair value of the equipment on July 1, 2021 is $3,110,000. The equipment has an economic life of 6 years with no salvage value.
3.		Blossom depreciates similar machinery it owns on the sum-of-the-years'-digits basis.
4.		The lessee pays all executory costs.
5.		Blossom's incremental borrowing rate is 9% per year. The lessee is aware that the lessor used an implicit rate of 9% in computing the lease payments.

Questions:

a) Indicate the type of lease Blossom Company has entered into and what accounting treatment is applicable.

Financial Lease Method or Operating Lease Method

b)Prepare the journal entries on Blossom's books that relate to the lease agreement for the following dates: (Credit account titles are automatically indented when amount is entered. )

1.		July 1, 2021.
2.		December 31, 2021.
3.		July 1, 2022.
4.		December 31, 2022.

Date Account Titles and Explanation Debit Credit (To record amortization.) (To record interest payment.) (To record amortization.) (To record interest payment.)