SheffieldCorporation leased equipment toShamrock, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $1,105at the beginning of each year of the3-year lease. The equipment has an economic useful life of7years, a fair value of $8,700, a book value of $6,700, andSheffieldexpects a residual value of $6,200at the end of the lease term.Sheffieldset the lease payments with the intent of earning a4% return, thoughShamrockis unaware of the rate implicit in the lease and has an incremental borrowing rate of6%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

What is the amount of the rental payments used in the lease agreement? (Round answer to 0 decimal places. e.g. 5,275.) eTextbook and Media List of Accounts Prepare the entries for Shefeld for 2020. (Credit account titles are automaticallyindented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e3. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit A v (To record the recognition of the revenue) A v (To record depreciation expense on the leased equipment) How would Sheffield's accounting in part a change if it incurred legal fees of $600 to execute the lease documents and $400 in advertising expenses for the year in connection with the lease? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit