Exercise 21-4 Tamarisk Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Vaughn Company. The term of the noncancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement 1. Vaughn Company has the option to purchase the equipment for $16,300 upon termination of the lease. 2. The equipment has a cost and fair value of $155,000 to Tamarisk Leasing Company. The useful economic life is 2 years, with a salvage value of $16,300 3. Vaughn Company is required to pay $4,900 each year to the lessor for executory costs. 4. Tamarisk Leasing Company desires to earn a return of 8% on its investment. 5. Collectibility of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. (a) Prepare the journal entries on the books of Tamarisk Leasing to reflect the payments received under the lease and to recognize income for the years 2017 and 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 0.527552 and the final answers to 0 decimal places e.g. 5,275.) Debit Date Account Titles and Explanation Credit (b) Assuming that Vaughn Company exercises its option to purchase the equipment on December 31, 2018, prepare the journal entry to reflect the sale on Tamarisk's books. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 0.527552 and the final answers to O decimal places e.g. 5,275.) Account Titles and Explanation Debit Date Credit 12/31/18