On January 1, 2017, Irwin Animation sold a truck to Peete Finance for $35,000 and immediately leased it back. The truck was carried on Irwins books at $28,000. The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Irwin at lease-end. The lease requires three equal rental payments of $8,696 at the end of each year (first pay- ment on January 1, 2018). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, and the residual value at the end of the lease term is expected to be $14,000, none of which is guaranteed. Prepare Irwins 2017 journal entries.

Assume the same facts as above, except the lease term is now 5 years and the five annual rental payments are $8,309, with no expected residual value at the end of the lease term. Prepare Irwins 2017 journal entries assuming these new facts.