On January 1, 2019, Amity Company leases a crane to Baltimore Company. The lease contains the following terms and provisions

• The lease is noncancelable and has a term of 10 years.
• The lease does not contain a renewal or bargain purchase option.
• The annual rentals are $4,000, payable at the beginning of each year.
• Baltimore agrees to pay all executory costs directly to a third party.
• The cost of the equipment to the lessor is $24,925.00. The fair value of the equipment is $26,400.
• Amity incurs initial direct costs of $1,415.09.
• The interest rate implicit in the lease is 12%
• Amity expects to collect all lease payments from Baltimore.
• Amity estimates that the fair value at the end of the lease term will be $3,190 and that the economic life of the crane is 12 years. This value is not guaranteed by Baltimore.

Required:

1. Next Level What are initial direct costs? Discuss the accounting treatment of these costs. Are they treated in the same manner for (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease?
2. From the lessor's viewpoint, is the preceding lease a sales-type or direct financing lease? Give reasons to support your conclusion.
3. Prepare the journal entries for Amity for 2019.

1. prepare the 13 journal entries for amity for 2019

dont forget to put the dates

Chart of Accounts CHART OF ACCOUNTS Amity Company General Ledger ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts Receivable 432 Interest Income 122 Lease Receivable 123 Unguaranteed Residual Asset EXPENSES 141 Inventory 500 Cost of Goods Sold 152 Prepaid Insurance 511 Insurance Expense 180 Equipment 512 Utilities Expense 189 Accumulated Depreciation 513 Rent Expense 190 Equipment Leased to Others 514 Initial Direct Sales-Type Lease Expense Chart of Accounts 152 Prepaid Insurance 511 Insurance Expense 180 Equipment 512 Utilities Expense 189 Accumulated Depreciation 513 Rent Expense 190 Equipment Leased to Others 514 Initial Direct Sales-Type Lease Expense 521 Salaries Expense LIABILITIES 532 Bad Debt Expense 211 Accounts Payable 540 Interest Expense 231 Salaries Payable 541 Depreciation Expense 250 Unearned Interest 559 Miscellaneous Expenses 261 Income Taxes Payable 910 Income Tax Expense EQUITY 311 Common Stock 331 Retained Earnings Initial direct costs include which of the following items? Check all that apply. Legal fees Commissions Payments made to a third party to guarantee the leased asset's residual value Equipment purchased for lease Depreciation on equipment purchased for lease Select the lease type that matches the described accounting treatment of initial direct costs. From the lessor's viewpoint, is the lease a sales-type or direct financing lease? Give reasons to support your conclusion