On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $403,067 over a 5-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2018. Georgia-Atlantic's incremental borrowing rate is 8.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $2.9 million.

1.Determine the price at which Builders is "selling" the equipment (present value of the lease payments) at June 30, 2018.

2.What amounts related to the lease would Builders report in its balance sheet at December 31, 2018 (ignore taxes)?

3.What amounts related to the lease would Builders report in its income statement for the year ended December 31, 2018 (ignore taxes)?