Kingbird Corporation enters into a 6-year lease of equipment on December 31, 2019, which requires 6 annual payments of $37,400 each, beginning December 31, 2019. In addition, Kingbird guarantees the lessor a residual value of $22,000 at the end of the lease. However, Kingbird believes it is probable that the expected residual value at the end of the lease term will be $12,000. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $160,000. Prepare Lost Arks 2019 and 2020 journal entries, assuming the implicit rate of the lease is 11% and this is known to Kingbird.