Problem 4. Direct Financing Lease with Residual Value On January 1, 20x1, ABC Financing Co. leased equipment to XYZ Inc. Information on the lease is shown below. Cost of Equipment P3 00 , 000 Useful Life of Equipment 5 years Lease Term 4 wears Annual rent payable at the end of each year 100, 000 Market rate of interest Residual Value 20 , 000 The equipment will revert back to ABC at the end of the lease term. The lease is classified as sales type lease. Requirements: Compute for the following assuming the residual value is (1) guaranteed and (2) unguaranteed a. Gross investment in the lease on January 1, 20x1 b. Net-investment in the lease on January 1, 20x1 c. Total interest income to be recognized over the lease term d. Sales, cost of sales and gross profit recognized on the lease e. Journal entry on January 1, 20x1