Swifty Leasing Company agrees to lease equipment to Nash 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 $569,000, and the fair value of the asset on January 1, 2020, is $682,000.
3.		At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $55,000. Nash estimates that the expected residual value at the end of the lease term will be 55,000. Nash 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.		Swifty desires a 9% rate of return on its investments. Nashs incremental borrowing rate is 10%, and the lessors implicit rate is unknown.

b.. Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.)

Annual Rental Payment:

c. .Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,972.)

Present Value of Minimum lease payments:

d. Prepare the Journal Entries Swifty would make in 2020 and 2021 related to the lease agreement