The following facts pertain to a non$-$cancelable lease agreement between Barry Leasing Company and Deck Company, a lessee.

Commencement of Lease Date January $1,2025$

Annual lease payment due at the beginning of the year beginning with January $1,2025$

$$17,000$

$$100,000$

Book Value of Lease Equipment on LESSOR books

$6$ years

Lease term

$7$ years

Economic life of leased equipment

$$120,000$

Fair Value of asset at January $1,2025$

$6\%$

Lessor's Implicit Rate in lease $($known to lessee$)$

$8\%$

Lessee's incremental borrowing rate

The lessee guarantees a residual value of $$20,000,$ but the lessee only expects to have to pay $$2,000$ of this guarantee in cash.

The asset will revert to the lessor at the end of the lease term.

Note this qualifies as a finance lease so you do not need to perform the tests.

A$.$ Prepare the entry on the Lessee's books to capitalize this finance lease on January $1,2025.$

B$.$ Complete the entry to pay the first lease payment on $\frac{1}{1}\frac{?}{2025}.$

C$.$ Prepare the appropriate entry $($or entries$)$ that would need to be made at the end of the first year on the lessee's books.

D$.$ Switch over to the Lessor side. What sale entry would have been made on $1/1/25$ on the Lessor books. Only the sale entry is required.