Question 1 (Lease with bargain purchase option; lessee): The following facts pertain to a non-cancelable lease agreement between Lennox Leasing Company and Gill Company, a lessee. Photo de The payment to be made in December 31 200 of each you for the first one Brain-purchase option price at the end of a form Leseler conomis life of land equipment Let's incrementa borowing Less's pic Required: 1. Prepare the journal entries to record the lease at the beginning of the lease term for the lessee. 2. Prepare all entries required on the books of Gill company to record the lease on December 31, 2018, assuming Gill company uses straight-line depreciation for all long-term assets. Question 2 (Lease with a guaranteed residual value): HKU Leasing agrees to lease equipment to Minion Furniture on January 1, 2018. The following information relates to the lease agreement. 1. The term of the lease is 5 years with no renewal option, and the machinery has an estimated economic life of 5 years. 2. The cost of the machinery is $650,000. The fair value of the asset on January 1, 2018 is S650,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $50,000. Minion uses straight-line depreciation for all long-term assets. 4. HKU's implicit rate is 5%, and Minion's incremental borrowing rate is 5% Required: 1. Calculate the amount of the annual rental payment required (assuming payments are to be made in advance). 2. Prepare the journal entries to record the lease for Minion (the lessee) for the year 2018. 3. Prepare the journal entries to record the lease for HKU (the lessor) for the year 2018. Question 3 (Sales-type lease with guaranteed residual value; lessee): On January 1, 2019, ABC Company manufactures an X-ray machine with an estimated life of 8 years and leases it to QM Medical Center for a period of 8 years. The normal selling price of the machine is $595,678, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $20,000. The annual lease payment is $70,000 (assuming payments are to be made in advance on December 31 of each year except for the first one). Initial direct costs of $10,000 are incurred by ABC Company on January 1, 2019. ABC Company incurred costs of $315,000 in manufacturing the machine. Implicit interest rate is 6% Required: Prepare the journal entries to record the lease at the inception date and the second lease payment for the lessee