Castle Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Jan Way Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement: 1. 2. Jan Way has the option to purchase the equipment for $16,000 upon termination of the lease. It is not reasonably certain that Jan Way will exercise this option. The equipment has a cost of $120,000 and fair value of $160,000 to Castle Leasing. The useful economic life is 2 years, with a residual value of $16,000. 3. Castle Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Castle Leasing is probable. (a) Your answer is partially correct. Prepare the journal entries on the books of Castle Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Date Account Titles and Explanation 1/1/20 Lease Receivable Cost of Goods Sold Sales Revenue Debit 160000 105488 Credit te Account Titles and Explanation Debit Lease Receivable Cost of Goods Sold Sales Revenue Inventory D Cash Lease Receivable Interest Revenue Cash Lease Receivable Interest Revenue 160000 105488 78244 16000 Credit 145488 120000 73756 4488 16000