Flint Company leased equipment to Land Company for a ve-year period. Flint paid $46,965 for the equipment, which equals its current carrying value (with estimated useful life of ve years). The lease commenced on January 1 of Year 1. Flint uses a target rate of return of 8% in all lease contracts. The rst payment was received on January 1 of Year 1, and Flints 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 term. Please solve A through C and show how you calculated each value.

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.

b. Prepare a schedule of the lease receivable for the lessor for the full lease term. - Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. 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