For each of the three independent situations below determine the amount of the annual lease payments. Each describes a finance lease in which annual lease payments are payable at the beginning of each year. Each lease agreement contains an option that permits the lessee to acquire the leased asset at an option price that is sufficiently lower than the expected fair value that the exercise of the option appears reasonably certain. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

	Situation
	1			2			3
Lease term (years)		6			6			5
Lessor's rate of return		9	%		10	%		8	%
Fair value of leased asset	$	96,000		$	438,000		$	203,000
Lessor's cost of leased asset	$	68,000		$	438,000		$	163,000
Purchase option:
Exercise price	$	28,000		$	68,000		$	40,000
Exercisable at end of year:		6			6			4
Reasonably certain?		yes			no			yes

Determine the annual lease payments for each situation: (Round your intermediate and final answers to the nearest whole dollar amount.)

On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $430,152 and has an expected economic life of five years. Aqua and Maywood expect the residual value at December 31, 2024, to be $66,000. Negotiations led to Maywood guaranteeing a $94,000 residual value. Equal payments under the lease are $132,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1, 2021 and December 31, 2021, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar.)