prepare the journal entries for 2025

On January 1,2025. Teal Mountain Co. leased a building to Sandhill Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. The building is expected fo have a residual value at the end of the lease of $3,300,000 (unguaranteed). 2. The leased building has a cost of $3,800,000 and was purchased for cash on January 1, 2025. 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. 4. Lease payments are $290,000 per year and are made at the beginning of the year. 5. Sandhill has an incremental borkowing rate of 5%, and the rate implicit in the lease is unknown to Sandhill. 6. Both the lessor and the lessee are on a calendar-year basis