Using the information provided in E18-20. assume now that Beachmont provides a guarantee of the residual value of $7,000 that will cover any unrecovered fair value by the lessor.

Data from E18-20.

Beachmont Restaurants, Inc. enters into a lease for standard stoves and grills. The lease term is 3 years with no renewal or purchase options. There is no residual value guarantee. and the lease term,s do not provide for a transfer of title. The economic life of the asset is 10 years. According to the terms of the lease contract, Beachmont is required to pay rentals of $700 for the first year with payments increasing by 15% per year for Years 2 and 3. All lease payments are made on January 1. The implicit rate in the lease is 6%. The fair value of the asset is $9,000. Beachmont knows the lessor's implicit rate. Beachrnont's fiscal year ends on December 31.

Required

a. Determine the classification of the lease for the lessee.

b. Measure the right-of-use asset and the lease liability and prepare the lessee's amortization table.

c. Prepare the journal entries over the lease term. Assume the leased asset has a fair value of $7,000 at the end of the lease term.