Whispering Industries and Metlock Inc. enter into an agreement that requires Metlock Inc. to build three diesel-electric engines to Whisperings specifications. Upon completion of the engines, Whispering has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2017, and requires annual rental payments of $373,637 each January 1, starting January 1, 2017.

Whisperings incremental borrowing rate is 8%. The implicit interest rate used by Metlock and known to Whispering is 6%. The total cost of building the three engines is $2,500,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Whispering depreciates similar equipment on a straight-line basis. At the end of the lease, Whispering assumes title to the engines. Collectibility of the lease payments is probable. (b)Prepare the journal entry to record the transaction on January 1, 2017, on the books of Whispering (the lessee).(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) (c)Prepare the journal entry to record the transaction on January 1, 2017, on the books of Metlock (the lessor).(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,971.) (d)Prepare the journal entries for both the lessee and lessor to record the first rental payment on January 1, 2017.(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) ePrepare a lease amortization schedule for 2 years.(Round answers to 0 decimal places e.g. 58,971.) fPrepare the journal entries for both the lessee and lessor to record any entries needed in connection with the lease at December 31, 2017.(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) gShow the items and amounts that would be reported on the balance sheet (not notes) at December 31, 2017, for both the lessee and the lessor. hAssume that Whispering incurs legal fees related to the execution of the lease of $30,000. In addition, assume Whispering receives a lease incentive from Metlock of $50,000 to enter the lease. How will this affect your answer to part (b)?