Sheridan Company, as lessee, enters into a lease agreement on July 1, 2021, for equipment. The following data are relevant to the lease agreement: 2. The term of the noncancelable lease is 4 years, with no renewal option. Payments of $874,647 are due 1. on July 1 of each year. The fair value of the equipment on July 1, 2021 is $3,170,000. The equipment has an economic life of 6 years with no salvage value. Sheridan depreciates similar machinery it owns on the sum-of-the-years'-digits basis. The lessee pays all executory costs. 5. Sheridan's incremental borrowing rate is 10% per year. The lessee is aware that the lessor used an implicit rate of 7% in computing the lease payments. Click here to view factor tables. 3. 4. Indicate the type of lease Sheridan Company has entered into and what accounting treatment is applicable. Prepare the journal entries on Sheridan's books that relate to the lease agreement for the following dates: (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to o decimal places e.g. 5,250.) 1. 2. 3. 4 July 1, 2021 December 31, 2021. July 1, 2022 December 31, 2022 Date Account Titles and Explanation Debit Credit