Flounder Industries and Culver Inc. enter into an agreement that requires Culver Inc, to build three diesel electric engines to Founder's specifications. Upon completion of the engines, Flounder has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2020, and requires a rental payments of $383,763 each January 1, starting January 1, 2020 Flounder's incremental borrowing rates . The implic interest rate used by Calver and known to Founders . The total cost of building the three engines is $2,579,000. The economicile of the engines estimated to be 10 years, with residual value set at reno. Founder depreciates mir egment on a straight-line basis. At the end of the lease, Founder ett to the engine Collectibity of the lease payment is probable Click here tot es Your answer is correct. Discuss the nature of this lease transaction from the viewpoints of both less and lesson The lease should be treated so n ce lease by Flounder Industries The lease should be treated as sales typese by Culver Inc. Click if you would like to show Work for this question Open Show Work (6) Prepare the mal entry to record the transaction on January 1, 2020, on the books or Founder the lesse. Creato r TRW WIU indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal plac and the final answer to decimal places . 1.) Account Titles and Explanation Lensed Equipment Lease Liability (c) Prepare the journal entry to record the transaction on January 1, 2020, on the books of Culver (the lessor). (Credit account titles are automatically indented when amount is en indent manually. If no entry is required, select "No Entry for the account ties and enter for the amounts, Round answers to decimal places eg. 58,971) Account Titles and Explanation Lease Receivable Cast of Goods Sold Isales Revenue (d) Prepare the journal entries for both the less and lesser to record the strend ent on January 1, 2020. (Credit account titles are automatically indented when amount is dent manually. If no entry is required select "No Entry for the account s and enter for the amounts) Accounties and Explanation Lessee (anuary 1, 2020) Debut maent manually. If no entry is required, select "No Entry for the account titles and enter o for the amounts. Round answers to decimal places Credit & / Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue 11 // // Inventory (d) Prepare the journal entries for both the lessee and lessor to record the first rental payment on January 1, 2020. (Credit account titles are automatically in indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Debit Account Titles and Explanation Lessee (January 1, 2020) Lease Liability Lessor (January 1, 2020) Cash De Lease Receivable