QUESTION 32 Sunland Co. leased machinery from Young, Inc. on January 1, 2020. The lease term was for 8 years, with equal annual rental payments of $5,400 at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for $1,500, which Sunland is reasonably certain it will exercise as it believes the fair value of the machinery will be at least $ 6,700. The machinery has a useful life of 10 years and a fair value of $40,000. The implicit rate of the lease is not known to Sunland. Sunland's incremental borrowing rate is 1096. Which of the following is the correct journal entry (entries) for Sunland on January 1, 2020? Note: Present value of 1 at 1096 for 8 periods: 0.46651 Present value of 1 at 10% for 10 periods: 0.38554 Present value of an annuity due of 1 at 10% for 8 periods: 5.86842 Present value of an annuity due of 1 at 10% for 10 periods: 6.75902 . Right-Of-Use Asset Lease Liability $ 32,389 $ 32,389 Right-Of-Use Asset Lease Liability $ 32,389 $5,400 Lease Liability Cash $ 5,400 Prepaid Rental Cash $ 5,400 $ 5,400 Right-Of-Use Asset Lease Liability $ 34,273 $ 34,273 Lease Liability Cash $5,400 $5,400 D. Right-Of-Use Asset Lease Liability $ 34,815 Lease Liability Cash $ 34,815 $5,400 $5,400