ES 2. 3. Exercise 21-17 (Part Level Submission) On January 1, 2020, Shamrock Co. leased a building to Pharoah Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $3,100,000 (unguaranteed). The leased building has a cost of $3,600,000 and was purchased for cash on January 2020. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. Lease payments are $285,000 per year and are made at the beginning of the year. 5. Pharoah has an incremental borrowing rate of 7%, and the rate implicit in the lease is unknown to Pharoah. 6. Both the lessor and the lessee are on a calendar-year basis. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided) (0) Your answer is correct. Prepare the journal entries that Shamrock should make in 2020. (Credit account titles are automatically indented when amount is entered. Donc indent manually. Record journal entries in the order presented in the problem.) Date Credit Debit Account Titles and Explanation 1/1/20 . Buildings 3,600,000 . 3,600,000 Cash (To record cost of the building) 1/8/20 . Cash 285,000 (b) Prepare the journal entries that Pharoah should make in 2020. (Credit account titles are automatically Indented w Indent manually. Round answers to 0 decimal places, e.g. 5,275. Record fournal entries in the order present Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) Click if you would like to Show Work for this question: Open Show Work