Sage Hill Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Oriole Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement: 2. 1. Oriole has the option to purchase the equipment for $17,000 upon termination of the lease. It is not reasonably certain that Oriole will exercise this option. The equipment has a cost of $140,000 and fair value of $195,500 to Sage Hill Leasing. The useful economic life is 2 years, with an unguaranteed residual value of $17,000. 3. Sage Hill Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Sage Hill Leasing is probable. Click here to view the factor table. (a) Prepare the journal entries on the books of Sage Hill Leasing to reflect the payments received under the lease and to recognize income for the years 2017 and 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 1/1/17 Lease Receivable 195,500 Cost of Goods Sold Sales Revenue Inventory 140,000 12/31/17 v Cash Lease Receivable Interest Revenue 12/31/18 Cash Lease Receivable Interest Revenue