On January 1, 2020, Sheridan Company leased equipment to Flynn Corporation. The following information pertains to this lease. 1 2. 3. 4 The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $3,000, while the expected residual value at the end of the lease is $7,000 Equal rental payments are due on January 1 of each year, beginning in 2020, The fair value of the equipment on January 1, 2020, is $170,000, and its cost is $90.000, The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight line basis. Sheridan set the annual rental to ensure a 6% rate of return. Flynn's incremental borrowing rate is 8%, and the implicit rate of the lessor is unknown Collectibility of lease payments by the lessor is probable. 4. 5. 6. Both the lessor and the lessee's accounting periods end on December 31. (b) Your Answer Correct Answer x Your answer is incorrect. Calculate the amount of the annual rental payment. (Round answer to decimal places, eg,5,275.) Annual rental payment $ 26454 e Textbook and Media Solution Prepare all the necessary journal entries for Sheridan for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually Round answers to decimal places, es 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 1/1/20 Lease Receivable 170000 Cost of Goods Sold 90000 Sales Revenue Inventory (To record the lease) 1/1/20 Cash Lease Receivable To rend lease navment) 12/31/20 Lease Receivable Interest Revenue e Textbook and Media List of Accounts Save for Later Attempts: 1 of 3 used Submit Answer Question Part Score 3.41/4 (e) The parts of this question must be completed in order. This part will be available when you complete the part abovt