Ivanhoe Company leases a building to Cullumber, Inc. on January $1,2025.$ The following facts pertain to the lease

agreement.

The lease term is $5$ years, with equal annual rental payments of $$4,061$ at the beginning of each year.

Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is

not of a specialized nature.

The building has a fair value of $$19,200,$ a book value to Ivanhoe of $$12,200,$ and a useful life of $6$ years.

At the end of the lease term, Ivanhoe and Cullumber expect there to be an unguaranteed residual value of

$$3,050.$

Ivanhoe wants to earn a return of $9\%$ on the lease, and collectibility of the payments is probable. This rate is

known by Cullumber.

Click here to view factor tables.

$($b$)$ Using the original facts of the lease, show the journal entries to be made by both Ivanhoe and Cullumber in $2025.$

$($List all debit entries before credit entries. If no entry is required, select $"$No Entry" for the account

titles and enter $0$ for the amounts. For calculation purposes, use $5$ decimal places as displayed in the

factor table provided and round final answers to $0$ decimal places, e$.$g$.5,275.$ Credit account titles

are automatically indented when the amount is entered. Do not indent manually.$)$

Ivanhoe's Journal Entries

$($To record the lease$)$

$($To record lease payment$)$

Cullumber's Journal Entries

$($To record the lease$)$ Please find both journal entries