Pina Leasing Company agrees to lease equipment to Grouper Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $510,000, and the fair value of the asset on January 1, 2020, is $717,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $60,000. Grouper estimates that the expected residual value at the end of the lease term will be 60,000. Grouper amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Pina desires a 11% rate of return on its investments. Groupers incremental borrowing rate is 12%, and the lessors implicit rate is unknown. (Assume the accounting period ends on December 31.) Click here to view factor tables.

A. Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.

B. Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.)

C.

Prepare the journal entries Grouper would malce in 2020 and 2021 related to the lease arrangement (Credit account titles are sutomatically indented when amount is entered. Do not indent manually. If no entry is required select "No Entry for the account titles and enter for the amounts. Round answers to decimal placeses 58.972. Record journal entries in the order presented in the problem Date Account Titles and Explanation Debit Cn 1/1/20 Leased Equipment (To record the lease.) Lead Lely Cash (To record lease payment.) 12/21/20 (To record amortization) (To record interest.) (To record amortization) (To record interest.)