On January 1, 2020, Carter Company, a manufacturer, leases equipment with an estimated economic life of 10 years and leases it to Addison Airlines for a period of 8 years. The normal selling price (current fair value) of the equipment is $299,140. The equipment cost Carter Company $180,000 in manufacturing costs and is in inventory for that amount. Addison will pay annual payment of $44,495 at the beginning of each year beginning with January 1, 2020. The residual value of the asset is estimated by Carter to be $10,000 but this residual value is not guaranteed by Addison Carter has determined that the collectability of the lease payment is probable and at the implicit interest rate is 6% Addison has an incremental borrowing rate of 7% but is aware of the implicit rate of return. Both companies have a year end of December 31, and both companies normally depreciate their assets using straight line depreciation. 7 A- BI E %93 a. What type of lease is this for Carter Company and Why? b. Prepare all of the lessor's journal entries for the first year (2020). c. How much interest revenue will the lessor recognize for the year ending 12/31/2021? (Second Year - Journal entries are not required.) d. Prepare all of the lessee's journal entries for the first year (2020). 7 & e. If the $10,000 residual value was guaranteed by the lessee, what impact would this have on the lease payment calculated by the lessor, Carter? What would be the amount of the lease payment? I 1. If the $10,000 residual value was guaranteed by the lessee, Addison, and she expected the asset to have a residual value of $3,000 at the end of the lease what would be the value of the ROU Asset at January 1, 2020? please show steps for Computation thanks