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Sheridan Co. leased machinery from Young, Inc. on January 1, 2020. The lease term was for 8 years, with equal annual rental payments of $5,500 at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for $2,500, which Sheridan is reasonably certain it will exercise as it believes the fair value of the machinery will be at least $5,000. The machinery has a useful life of 10 years and a fair value of $39,000. The implicit rate of the lease is not known to Sheridan. Sheridan's incremental borrowing rate is 10%. Prepare Sheridan's 2020 journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal ploces as displayed in the factor twble provided and round final answers to 0 decimal places. eg. 5,275. Record journal entries in the order presented in the problem.)