Problem 21A-6 b-f Cheyenne Leasing Company agrees to lease equipment to Ayayai Corporation on January 1, 2017. 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 $500,000, and the fair value of the asset on January 1, 2017, is $659,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $103,000. Ayayai estimates that the expected residual value at the end of the lease term will be 103,000. Ayayai amortizes all of its leased equipment on a straight-line basis 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2017. 5. The collectibility of the lease payments is probable. 6, Cheyenne desires a 9% rate of return on its investments. Ayayai's incremental borrowing rate is 10%, and the lessor's implicit rate is unknown Assume the accounting period ends on December 31.) Click here to view factor tables 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 O decimal places e.g. 58,972.) Annual rental payment SHOW LIST OF ACCOUNTS LINK TO TEXTLINK TO TEXT 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 O decimal places e.g. 58,972.) Present value of minimum lease payments Prepare the journal entries Ayayai would make in 2017 and 2018 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 O decimal places e.g. 58,972.) Date Account Titles and Explanation Debit Credit To record the lease.) To record lease payment.) (To record amortization.) To record interest.) (To record amortization.) (To record amortization.) (To record interest.) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare the journal entries Cheyenne would make in 2017 and 2018 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 0 for the amounts. Round answers to O decimal places e.g. 58,972.) Date Account Titles and Explanation Debit Credit (To record the lease.) To record lease payment.) List Of Accounts Problem 21A-6 b-f Accounts Payable Accumulated Depreciation-Building Accumulated Depreciation-Leased Building Accumulated Depreciation-Capital Leases Accumulated Depreciation-Equipment Accumulated Depreciation-Leased Equipment Accumulated Depreciation-Leased Machinery Accumulated Depreciation-Machinery Advertising Expense Amortization Expense Airplanes Buildings Cash Cost of Goods Sold Deferred Gross Profit Deposit Liability Depreciation Expense Equipment Executory Costs Executory Costs Payable Gain on Disposal of Equipment Gain on Disposal of Plant Assets Gain on Lease Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Inventory Land Leased Asset Leased Buildings Leased Equipment Lease Expense Leased Land Lease Liability Lease Receivable Lease Revenue Legal Expense Loss on Capital Lease Machinery Maintenance and Repairs Expense Notes Payable Prepaid Lease Executory Costs Prepaid Legal Fees Property Tax Expense Property Tax Payable Rent Expense Rent Payable Rent Receivable Rent Revenue Revenue from Sale-Leaseback Right-of-Use Asset Salaries and Wages Expense Sales Revenue Selling Expenses Trucks Unearned Profit on Sale-Leaseback Unearned Lease Revenue Unearned Service Revenue