On January 1, 2025, Splish Brothers Co. leased a building to Sunland Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $3,100,000 (unguaranteed). 2. The leased building has a cost of $3,600,000 and was purchased for cash on January 1, 2025. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. 3. 4. Lease payments are $280,000 per year and are made at the beginning of the year. 5. 9 Sunland has an incremental borrowing rate of 6%, and the rate implicit in the lease is unknown to Sunland. 6. Both the lessor and the lessee are on a calendar-year basis. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (a) Your answer is partially correct. Prepare the journal entries that Splish Brothers should make in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date 1/1/25 Account Titles and Explanation Buildings Debit Credit Cash (To record cost of the building) Prepare the journal entries that Splish Brothers should make in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Date Account Titles and Explanation Debit Credit 1/1/25 Buildings 1/1/25 Cash (To record cost of the building) Cash 00-0000-00 12/31/25 12/31/25 (To record receipt of lease payment) Unearned Lease Revenue Lease Revenue (To record the recognition of the revenue each period) Depreciation Expense Accumulated Depreciation-Leased Building (To record depreciation expense on the leased asset) List of Accounts