Sunland Incorporated leases a piece of machinery to Marigold Company on January 1, 2020, under the following terms.

1.		The lease is to be for 4 years with rental payments of $13,325 to be made at the beginning of each year.
2.		The machinery has a fair value of $70,328, a book value of $52,480, and an economic life of 10 years.
3.		At the end of the lease term, both parties expect the machinery to have a residual value of $26,240. To protect against a large loss, Sunland requests Marigold to guarantee $18,430 of the residual value, which Irving agrees to do.
4.		The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature.
5.		The implicit rate is 5%, which is known by Marigold.
6.		The collectibility of the payments is probable.

Evaluate the criteria for the classification of the lease, and describe the nature of the lease. For the lessee, it is a

sales-type lease finance lease operating lease

, and for the lessor, it is a

finance lease operating lease sales-type lease

b. prepare JE for Marigold for the year 2020

c. prepare JE for Sunland for the year of 2020

d. Suppose Marigold did not guarantee any amount of the expected residual value. How would your answer to parts 1-c change