Problem 2 (15 points) Oscar Leasing Company agrees to lease equipment to Grover Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 6 years with no renewal option, and the machinery has an estimated economic life of 8 years. 2. The cost of the machinery is $310,000, and the fair value of the asset on January 1, 2020, is $424.000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $35.000. Grover estimates that the expected residual value at the end of the lease term will be $35,000. Grover amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. 6. Oscar desires a 6% rate of return on its investments. 7. Grover's incremental borrowing rate is 7%, and does not know the lessor's implicit rate. 8. The annual rental payments were set at $76,611. (Assume the accounting period ends on December 31 and adjusting entries are made annually.) Instructions: Use the blank pages that follow for your journal entries or create your own with all dates specified. If no entry is necessary on a specific date, write No Entry". (a) Prepare the journal entries Grover would make in 2020 and 2021 related to the lease arrangement. (b) Prepare the journal entries Oscar would make in 2020 and 2021 related to the lease arrangement