On April 1, 2019, Help Company entered into a five-year lease for equipment. Annual lease payments are $25,000, payable at the beginning of each lease year (April 1). At the end of the lease, possession of the equipment will revert to the lessor. The equipment has an expected useful life of five years. 

Similar equipment could be purchased for $170,000 cash. Help’s incremental borrowing rate is 6%. The interest rate implicit in the lease is not readily determinable. The company has a March 31 year end and it uses straight-line depreciation for its property, plant, and equipment. 

Required:

a. Prepare the journal entries relating to the lease and leased asset for Help’s fiscal year ending March 31, 2020. 

b. State the amounts related to the lease that would be reported on the statement of financial position (SFP) as at March 31, 2020, indicating the SFP classifications, account names, and amounts.