The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Sunland Company, a lessee. Inception date January 1, 2017 Annual lease payment due at the beginning of each year, beginning with January 1, 2017 $113,377 Residual value of equipment at end of lease term, guaranteed by the lessee $46,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, 2017 $557,000 Lessors implicit rate 11 % Lessees incremental borrowing rate 11 % The lessee assumes responsibility for all executory costs, which are expected to amount to $4,700 per year. The asset will revert to the lessor at the end of the lease term. The lessee has guaranteed the lessor a residual value of $46,000. The lessee uses the straight-line depreciation method for all equipment.

Prepare an amortization schedule that would be suitable for the lessee for the lease term.

Date...Annual Lease Pmt plus GRV....Interest......Reduction of lease liab.....lease liability

1-1-17

1-1-17

1-1-18

1-1-19

1-1-20

1-1-21

1-1-22

12-31-22

Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessees annual accounting period ends on December 31 and reversing entries are used when appropriate. All executory costs are paid as incurred.