E21.12 (LO 2,4) (Lessee Lessor Entries, Sales-Type Lease with Bargain Purchase Option) January 1, 2020, Bensen Company leased equipment to Flynn Corporation. The following informa pertains to this lease. 1. The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option in purchase the equipment for $1,000, while the expected residual value at the end of the lease is $5.000 2. Equal rental payments are due on January 1 of each year, beginning in 2020. 3. The fair value of the equipment on January 1, 2020, is $150,000, and its cost is $120,000. 4. The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight line basis. S. Bensen set the annual rental to ensure a 5% rate of return. Flynn's incremental borrowing rate is r, and the implicit rate of the lessor is unknown. 6. Collectibility of lease payments by the lessor is probable. Instructions (Both the lessor and the lessee's accounting periods end on December 31.) . Discuss the nature of this lease to Bensen and Flynn. b. Calculate the amount of the annual rental payment C. Prepare all the necessaryernal entries for Bensen for 2020, d. Suppose the collectibility daghe lease payments was not probable for Bensen. Prepare all nece joumal entries for the company in 2020. c. Prepare all the necessary journal entries for Flynn for 2020. Discuss the effect on the journal entry for Flynn at lease commencement, assuming in costs of $2.000 are incurred by Flynn to negotiate the lease