Sunland Leasing Company agrees to lease equipment to Coronado Corporation on January 1, 2020. The following information relates to the lease agreement.

1.		The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years.
2.		The cost of the machinery is $489,000, and the fair value of the asset on January 1, 2020, is $699,000.
3.		At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $60,000. Coronadoestimates that the expected residual value at the end of the lease term will be 60,000. Coronado amortizes all of its leased equipment on a straight-line basis.
4.		The lease agreement requires equal annual rental payments, beginning on January 1, 2020.
5.		The collectibility of the lease payments is probable.
6.		Sunland desires a 9% rate of return on its investments. Coronados incremental borrowing rate is 10%, and the lessors implicit rate is unknown.

(Assume the accounting period ends on December 31.)

a) Calculate the amount of the annual rental payment required

b)Compute the present value of the minimum lease payments

c)Prepare the journal entries Coronado would make in 2014 and 2015 related to the lease arrangement.

d)Prepare the journal entries Sunland would make in 2014 and 2015.