Prepare the journal entries Sheffield would make in 2025 and 2026 related to the lease arrangement. (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. 58,972. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) 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.) Present value of minimum lease payments \$ 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 .) Annual rental payment $ (To record lease payment.) 12/31/25 Amortization Expense Right-of-Use Asset (To record amortization.) 12/31/25 Interest Expense Lease Liability (To record interest.) 1/1/26 Lease Liability Cash 12/31/26 Amortization Expense Right-of-Use Asset (To record amortization.) (To record lease payment.) 31/25 Lease Receivable Interest Revenue Cash Lease Receivable Lease Receivable Interest Revenue Prepare the journal entries Wildhorse would make in 2025 and 2026 related to the lease arrangement. (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 anc enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,972. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Wildhorse Leasing Company agrees to lease equipment to Sheffield Corporation on January 1, 2025. 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 $523,000, and the fair value of the asset on January 1,2025 , is $758,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $60,000. Sheffield estimates that the expected residual value at the end of the lease term will be $60,000. Sheffield amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2025. 5. The collectibility of the lease payments is probable. 6. Wildhorse desires a 10% rate of return on its investments. Sheffield's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31.) Suppose Sheffield expects the residual value at the end of the lease term to be $50,000 but still guarantees a residual of $60,000. Compute the value of the lease liability at lease commencement. (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.) Lease liability 12/31/26 Interest Expense Lease Liability (To record interest.) 55,207