Prepare all necessary journal entries for Sandhill for $2025.($List all debit entries before credit entries. Credit account titles are

automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and

enter O for the amounts. Round answers to $0$ decimal places e$.$g$.5,275.$ Record journal entries in the order presented in the problem.$)$

$($To record the lease$)$

$($To record the first lease payment$)$

$($To record interest expense$)$ Carla Vista Company, a machinery dealer, leased a machine to Sandhill Corporation on January $1,2025.$ The lease is for an $8-$year

period and requires equal annual payments of $$34,300$ at the beginning of each year. The first payment is received on January $1,2025.$

Carla Vista had purchased the machine during $2024$ for $$140,000.$ Collectibility of lease payments by Carla Vista is probable. Carla

Vista set the annual rental to ensure a $8\%$ rate of return. The machine has an economic life of $10$ years with no residual value and

reverts to Carla Vista at the termination of the lease. Assume that Sandhill Corporation does not know the rate implicit in the lease

used by Carla Vista, and Sandhill's incremental borrowing rate is $10\%.$ In addition, assume that Sandhill incurs initial direct costs of

$$15,000.$

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$($a$)$

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Compute the amount of the lease liability and right$-$of$-$use asset for Sandhill. $($For calculation purposes, use $5$ decimal places as

displayed in the factor table provided and round final answers to $0$ decimal places e$.$g$.5,275.)$

Lease liability