Pearl Leasing Company (Lessor) agrees to lease equipment to Martinez Corporation (Lessee) on January 1, 2017. The following information relates to the lease agreement (a) The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of9 years. (b) The cost of the machinery is $525,000, and the fair value of the asset on January 1, 2017, is S713,000 (c) At the end of the lease term, the asset reverts to the lessor and has an unguaranteed residual value of $103,000. Martinez incurs initial direct costs of S1,400 and amortizes all of its leased equipment on a straight-line basis. (d) The lease agreement requires equal annual rental payments, beginning on January 1, 2017 (e) The collectibility of the lease payments is probable. (f) Pearl desires an 11% rate of return on its investments. Martinez's incremental borrowing rate is 12%, and the lessor's implicit rate is unknown to Martinez. Part 1 (5 points): Lessor Accounting Required: Round to the nearest dollar. 1. Calculate the amount of the annual rental payment required by Lessor. Show your supporting computations or financial calculator key strokes. 2. Prepare journal entries for Lessor in 2017. Show your supporting computations