On January 1, 2019, Ballieu Company leases specialty equipment with an economic lle of 8 yoars to Anderson Company. The lease contains the following terms and provisions - The lease is noncancelable and has a term of 8 yoars - The annual rentals are $5,000, payable at the beginning of each year. - The interest rate implicit in the lease is 14% - Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for $1 at the end of the lease term, December 31,2026 - The cost of the equipment to the lessor is $150,000, and the tair value is approximately $185,100. - Ballieu incurs no material inital dicect costs - It is probable that Balleu will collect the lease piyments. - Ballieu estimates that the tar value is expected to be significantly greater than $1 at the end of the lease term. Balieu calculates that the present value on January 1,2019 , of 8 annual payments in advance of $35,000 discounted at 14% is $185,090.68 (the $1 purchase option is ignored as immaterial) Required: 1. Next Level Identify the classification of the lease transaction from Ballieu's point of view. Give the reasons for your classification. 2. Prepare all the joumal entries for Baliou for the years 2019 and 2020. CHART OF ACCOUNTS Ballieu Company General Ledger Chart of Accounts 122 Lease Receivable 123 Equipment Leased to Others EXPENSES 141 Inventory 500 Cost of Goods Sold 152 Prepaid Insurance 511 Insurance Expense 181 Equipment 512 Utilities Expense 198 Accumulated Depreciation 521 Salaries Expense 532 Bad Debt Expense LIABILITIES 540 Interest Expense 211 Accounts Payable 541 Depreciation Expense 231 Salaries Payable 559 Miscellaneous Expenses 250 Unearned Interest 910 Income Tax Expense 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings On January 1, 2019, Ballicu Company leases specialty equipment with an economic lfe 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 annaal rentals are $35,000, payable at the beginning of each yeat - The interest rate implicit in the lease is 14% - Anderson agrees to pay al executory costs directly to a third party and is given an option to buy the equipment for 51 at the end of the lease tert. December 31, 2026 - The cost of the equipment to the lessor is 5150,000 , and the fair value is approximatey 5185,100 - Balievincurs no material intial direct costs - It is probable trat Balieu wil collect the lease paymerts - Balleu estimates that the tair value is expected to be sgnicicantly greater than $1 at the end of the lease term. Balleu calculates that the present value on January 1, 2019, of 8 annual payments in advance of $35,000 dscounied at 14\% is $185,090.68 (the $1 purchase option is ignored aa irmmaterial) Required 1. Next Level identify the classification of the lease transaction tham Balieuy paint of wers Gwe the reasons for your classification. 2. Pregare aif the joumal entries for Babieu for the years 2019 and 2020