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Cheyenne Corporation leased equipment to Sage Hill, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,250 at the beginning of each year of the 3-year lease. The equipment has an economic useful life of 7 years, a fair value of $8,000, a book value of $6,000, and Cheyenne expects a residual value of $5,500 at the end of the lease term. Cheyenne set the lease payments with the intent of earning a 7% return, though Sage Hill is unaware of the rate implicit in the lease and has an incremental borrowing rate of 9%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is correct. Determine the nature of the lease to both Cheyenne and Sage Hill. The lease is a/an operating lease to Sage Hill. The lease is a/an operating lease to Cheyenne. Prepare all necessary journal entries for Sage Hill in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, eg. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) >