Morgan Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following information relates to this agreement. 1. 2. 3. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. The cost of the asset to the lessor is $245,000. The fair value of the asset at January 1, 2020, is $245,000. The asset 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 $24,335, none of which is guaranteed. The agreement requires equal annual rental payments, beginning on January 1, 2020. Collectibility of the lease payments by Morgan is probable. 4. 5. Assuming the lessor desires a 8% rate of return on its investment, calculate the amount of the annual rental payment required. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and the final answer to O decimal places e.g. 5,275.) Amount of the annual rental payment $ 46000 Your answer is correct. Prepare an amortization schedule that is suitable for the lessor for the lease term. (Round answers to 0 decimal places e.g. 5 MORGAN LEASING COMPANY (Lessor) Lease Amortization Schedule Interest on Lease Recovery of Lease Receivable Receivable Annual Lease Payment Plus URV Date 1/1/20 $ $ $ i 1/1/20 46000 i 46000 1/1/21 46000 15920 30080 1/1/22 46000 13514 32486 1/1/23 46000 10915 35085 1/1/24 46000 8108 37892 1/1/25 46000 5076 40924 12/31/25 24335 1803 22532 $ 300335 $ 55336 $ 244999 Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease payments, and the recognition of revenue. Assume the lessor's annual accounting period ends on December 31, and it does not use reversing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/20 Lease Receivable 245000 Cost of Goods Sold 46000 Sales Revenue 46000 Inventory 245000 (To record the lease) 1/20 Cash 46000 Lease Receivable 46000 (To record the receipt of lease payment) Lease Receivable /31/20 15920 Interest Revenue 15920 1/21 Cash 46000 Lease Receivable 46000 /31/21 Lease Receivable 13514 Interest Revenue 13514