Blue Corporation leased equipment to Larkspur, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,148 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $7,200, a book value of $5,200, and Blue expects a residual value of $4,700 at the end of the lease term. Blue set the lease payments with the intent of earning a 6% return, though Larkspur is unaware of the rate implicit in the lease and has an incremental borrowing rate of 8%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. (a) Please help with part C (c) How would Blue's accounting in part a change if it incurred legal fees of $800 to execute the lease documents and $700 in advertising expenses for the year in connection with the lease? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Your answer is correct. What is the amount of the rental payments used in the lease agreement? (Round answer to O decimal places, e.g. 5,275.) (b) Rental payments $ Your answer is correct. 1,148 Prepare the entries for Blue for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation /1/20 Cash Debit 1,148 Credit Unearned Lease Revenue 2/31/20 Unearned Lease Revenue 2/31/20 Lease Revenue (To record the recognition of the revenue) Depreciation Expense Accumulated Depreciation-Leased Equipment (To record depreciation expense on the leased equipment) 1,148 743 1,148 1,148 743 Date Account Titles and Explanation Debit Credit