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Indiana Jones Corporation enters into a 6-year lease of equipment on December 31, 2016, which requires 6 annual payments of $40,000 each, beginning December 31, 2016. In addition, Indiana Jones guarantees the lessor a residual value of $20,000 at the end of the lease. However, Indiana Jones believes it is probable that the expected residual value at the end of the lease term will be $10,000. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $180,000. Prepare Lost Ark's 2016 and 2017 journal entries, assuming the implicit rate of the lease is 6% and this is known to Indiana Jones. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.) Click here to view the factor table. Date Account Titles and Explanation Debit December 31. 2016 Lease Receivable 700000 Cost of Goods Sold 525000 Sales Revenue Inventory IN |- IN I (T o reoord the lease) December 31, 2016 Cash IN |- E Lease Receivable (T 0 record receipt of lease payment) December 317 2017 Interest Receivable Interest Revenue lll