On January 1, 2019, Ballieu Company leases specialty equipment with the economic life of 8 years to Anderson Company. The lease contains the following terms and provisions:

On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions The lease is noncancelable and has a term of 8 years The annual rentals are $30,400, payable at the beginning of . The interest rate implicit in the lease is 12% 8 each Y and is on at the end of the lease Anderson agrees to pay all executory costs directly to a third party term, December 31, 2026. The cost of the equipment to the lessor is $145,500, and the fair value is approxi Ballieu incurs no material initial direct costs. It is probable that Ballieu will collect the lease payments. Balliou estimates that the fair value is expected to be significantly greater than Ballieu calculates that the present value on January 1, 2019 value on January 1, 2019, of 8 annual payments in advance of 530,400 discount 400 discounted at 12% is $169,138 21 (the $1 purchase option is ignored as immaterial) reasons for your classification Required: 1 Next Level Identify the classification of the lease transaction from Balus po 2. Prepare all the journal entries for Ballieu for the years 2019 and 2020 3 PAGE 1 GENERAL JOURNAL Score: 85/101 DATE CREDIT Jan. 1 169.138.21 169.138.21 1 ACCOUNT TITLE Lease Receivable Sales Revenue Equipment Leased to Others Equipment Cash 145,500.00 145,500.00 1 30.400.00 Lease Receivable 30,400.00 Dec 31 Interest Expense 16,648.59 16,648.59 Interest Income GENERAL JOURNAL Score: 45/51 DATE ACCOUNT TITLE POST REF CREDIT Jan. 1 Cash 30.400.00 30.400.00 Lease Receivable Interest Expense Dec. 31 14998.42 149242 Interest Income