Sheridan Company leases a building to Walsh, Inc. on January 1, 2017. The following facts pertain to the lease agreement. 1. The lease term is 6 years, with equal annual rental payments of $3,022 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $16,600, a book value to Sheridan of $9,600, and a useful life of 7 years. 4. At the end of the lease term, Sheridan and Walsh expect there to be an unguaranteed residual value of $2,400. 5. Sheridan wants to earn a return of 8% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. Click here to view the factor table. (b) Using the original facts of the lease, show the journal entries to be made by both Sheridan and Walsh in 2017. (For calculation purposes, use 5 decima factor table provided and round final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. D Sheridan Journal Entries Debit Credit Date Account Titles and Explanation 1/1/17 Lease Receivable Equipment Unearned Lease Revenue Gain on Lease (To record the lease) Cash Lease Receivable (To record lease payment) 12/31/17 Unearned Lease Revenue Interest Revenue Walsh's Journal Entries Debit Credit Date Account Titles and Explanation 1/1/17 Right-of-Use Asset Lease Liability (To record the lease) Lease Liability Cash (To record lease liability) 12/31/17 Interest Expense Lease Liability (To record interest expense) Amortization Expense Right-of-Use Asset (To record amortization of the right-of-use asset)