Flint Company leased equipment to Land Company for a five-year period. Flint paid $46,965 for the equipment, which equals its current carrying value (with estimated useful life of five years). The lease commenced on January 1 of Year 1 . Flint uses a target rate of return of 8% in all lease contracts. The first payment was received on January 1 of Year 1 , and Flint's accounting periods end on December 31. The lease contract contains a purchase option stating that Land Company can purchase the equipment for $4,000 on January 1 of Year 6 , at which time its residual value is estimated to be $6,500. It is reasonably certain that Land Company will exercise the purchase option at the end of the lease a. Compute the annual payment calculated by the lessor. - Note: Round answer to the nearest dollar. - Note: Do not use a negative sign with your answer. c. Provide journal entries for Year 1 and Year 2 for the lessor assuming that the equipment is held in the lessor's Inventory account. - Note: Round your answers to the nearest whole dollar. Prepaid Maintenance Expense Equipment Accumulated Depreciation Lease Receivable Right-of-Use Asset Accrued Legal Expense Deferred Lease Revenue Deposit Liability Lease Incentive Payable Lease Liability Sales Revenue Interest Revenue Lease Revenue Cost of Goods Sold Amortization Expense Depreciation Expense Interest Expense Lease Expense Loss on Lease Selling Expense Cash Initial Direct Cost Inventory Prepaid Maintenance Expense Equipment Accumulated Depreciation Lease Receivable Right-of-Use Asset Accrued Legal Expense Deferred Lease Revenue Deposit Liability Lease Incentive Payable Lease Liability Sales Revenue Interest Revenue Lease Revenue Cost of Goods Sold Amortization Expense Depreciation Expense Flint Company leased equipment to Land Company for a five-year period. Flint paid $46,965 for the equipment, which equals its current carrying value (with estimated useful life of five years). The lease commenced on January 1 of Year 1 . Flint uses a target rate of return of 8% in all lease contracts. The first payment was received on January 1 of Year 1 , and Flint's accounting periods end on December 31. The lease contract contains a purchase option stating that Land Company can purchase the equipment for $4,000 on January 1 of Year 6 , at which time its residual value is estimated to be $6,500. It is reasonably certain that Land Company will exercise the purchase option at the end of the lease a. Compute the annual payment calculated by the lessor. - Note: Round answer to the nearest dollar. - Note: Do not use a negative sign with your answer. c. Provide journal entries for Year 1 and Year 2 for the lessor assuming that the equipment is held in the lessor's Inventory account. - Note: Round your answers to the nearest whole dollar. Prepaid Maintenance Expense Equipment Accumulated Depreciation Lease Receivable Right-of-Use Asset Accrued Legal Expense Deferred Lease Revenue Deposit Liability Lease Incentive Payable Lease Liability Sales Revenue Interest Revenue Lease Revenue Cost of Goods Sold Amortization Expense Depreciation Expense Interest Expense Lease Expense Loss on Lease Selling Expense Cash Initial Direct Cost Inventory Prepaid Maintenance Expense Equipment Accumulated Depreciation Lease Receivable Right-of-Use Asset Accrued Legal Expense Deferred Lease Revenue Deposit Liability Lease Incentive Payable Lease Liability Sales Revenue Interest Revenue Lease Revenue Cost of Goods Sold Amortization Expense Depreciation Expense