Ivanhoe Leasing Company (Lessor agrees to lease equipment to Sarasota Construction (Lessee) on January 1, 2017. The following information relates to the lease agreement. (a) The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life or 9 years (b) The cost of the machinery is $653,420, and the fair value of the asset on January 1, 2017, is $887,406. (c) At the end of the lease term, the asset reverts to the lessor and has an unguaranteed residual value of $100,000. Sarasota incurs initial direct costs of S1,400 and amortizes all of its leased equipment on a straight-line basis. In addition, Sarasota agrees to pay the fixed annual insurance on the equipment of $3,000 to Ivanhoe at the same time as the rental payments. (d) The lease agreement requires equal annual rental payments, beginning on January 1, 2017. (e) The collectibility of the lease payments is probable. (f) Ivanhoe desires an 10% rate of return on its investments. Sarasota's incremental borrowing rate is 12%, and the lessor's implicit rate is unknown to Sarasota. Part 1 (6 points): Lessor Accounting (Required: Round to the nearest dollar) 1. Calculate the amount of the annual rental payment required by Lessor including the fixed insurance payment (hint: calculate annual rental payment without insurance first). Show your supporting computations or financial calculator key strokes. 2. Prepare journal entries for Lessor in 2017 and 2018. Show your supporting computations. 1. Prepare journal entries for Lessee in 2017. Show your supporting computations or key strokes. 2. Prepare journal entries for Lessee in 2018. Show your supporting computations