Exercise 21-7 On January 1, 2017, Flint Company leased equipment to Buffalo Corporation. The following information pertains to this lease. 1. The term of the noncancelable lease is 6 years, with no renewal option. The equipment reverts to the lessor at the termination of the lease. 2. Equal rental payments are due on January 1 of each year, beginning in 2017. 3. The fair value of the equipment on January 1, 2017, is $175,000, and its cost is $140,000. 4. The equipment has an economic life of 8 years, with an unguaranteed residual value of $12,000. Buffalo depreciates all of its equipment on a straight-line basis. 5. Flint set the annual rental to ensure an 12% rate of return. Buffalo's incremental borrowing rate is 13%, and the implicit rate of the lessor is unknown. 6. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by the lessor. (Both the lessor and the lessee's accounting period ends on December 31.) Click here to view factor tables Calculate the amount of the annual rental payment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to o decimal places e.g. 58,971.) The amount of the annual rental payment. SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare all the necessary journal entries for Buffalo for 2017. (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 o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) Prepare all the necessary journal entries for Buffalo for 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. It no entry is required, select "No Entry" for the account titles and enter o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to o decimal places e.g. 58,971.) Date Account Titles and Explanation Debit Credit (To record the lease.) (To record lease payment.) (To record depreciation.) (To record interest.) Prepare all the necessary journal entries for Flint for 2017. (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 o for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit Date 1/1/17 (To record the lease.) (To record lease payment.) 12/31/17 (To record interest.)