Prepare journal entries

Skysong Leasing Company signs a lease agreement on January 1, 2025, to lease electronic equipment to Sheridan Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement. 1. Sheridan has the option to purchase the equipment for $23,500 upon termination of the lease. It is not reasonably certain that Sheridan will exercise this option. 2. The equipment has a cost of $270,000 and fair value of $322,000 to Skysong Leasing. The useful economic life is 2 years, with a residual value of $23,500. 3. Skysong Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Skysong Leasing is probable. Click here to view factor tables. (a) Prepare the journal entries on the books of Skysong Leasing to record the payments received under the lease and to recognize income for the years 2025 and 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. 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.)