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 $22,500 upon termination of the lease. It is not reasonably certain that Oriole will exercise this option.
2.		The equipment has a cost of $250,000 and fair value of $273,000 to Sage Hill Leasing. The useful economic life is 2 years, with a residual value of $22,500.
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.

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(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 2020 and 2021. (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
1/1/2012/31/2012/31/21	enter an account title for the journal entry on January 1 2020	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1 2020	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1 2020	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on January 1 2020	enter a debit amount	enter a credit amount
1/1/2012/31/2012/31/21	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
1/1/2012/31/2012/31/21	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

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(b)

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