In January 1, 2018, XYZ Company signs a 4-year, non-renewable and non-cancelable lease agreement to lease equipment from ABC Company. The lease agreement requires equal annual rental payment of $90,000 beginning on January 1, 2018. The following information pertains to this lease agreement. 1. The Fair value of the equipment at January 1, 2018 is $310,000 2. The equipment has an estimated economic life of 5 years. 3. The yearly rental payment includes $7,245.54 of executory costs related to taxes on the property. 4. The lessee's incremental borrowing rate is 10%. The lessor's implicit rate is 9% and is known to the lessee. 5. The equipment will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $24,000, none of which is guaranteed. 6. Both XYZ Company and ABC Company uses the straight-line method of depreciation. Additional information: The present value of an Ordinary Annuity of $1 and the present value of an Annuity Due of $1 for 5 periods at 8%, 9% and 10% are as follows The present value of an Ordinary Annuity of $1 Period 8% 9% 10% 1 0.92593 0.91743 0.90909 1.78326 1.75911 1.73554 3 2.57710 2.53129 2.48685 3.31213 3.23972 3.16987 5 3.99271 3.88965 3.79079 The present value of an Annuity Due of $1 Period 8% 9% 10% 1 1.00000 1.00000 1.00000 2 1.92593 1.91743 1.90909 3 2.78326 2.75911 2.73554 3.57710 3.53129 3.48685 4.31221 4.23972 4.16987 Instructions: (a) What is the nature of this lease to XYZ Company? Why? (b) Prepare an amortization schedule through the years 2018 and 2019 that would be suitable for the lessee. (c) Prepare all of the journal entries for the lessee for 2018 and 2019 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31