Sage Hill Leasing Company signs a lease agreement on January 1, 2020, 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:

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.
2.		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 a 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.

Date Account Titles and Explanation Debit Credit