Bidwell Leasing purchased a single-engine plane for its fair value of $695,470 and leased it to Red Baron Flying Club on January 1, 2018.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Terms of the lease agreement and related facts were:

1. Eight annual payments of $125,000 beginning January 1, 2018, the beginning of the lease, and at each December 31 through 2024. Bidwell Leasings implicit interest rate was 12%. The estimated useful life of the plane is eight years. Payments were calculated as follows:

Amount to be recovered (fair value)	$	695,470
Lease payments at the beginning of each of the next eight years: ($695,470 5.56376*)	$	125,000

*Present value of an annuity due of $1: n = 8, i = 12%.

2. Red Baron's incremental borrowing rate is 13%.
3. Incremental Costs of negotiating and consummating the completed lease transaction incurred by Bidwell Leasing were $18,555.

REQUIRED: 2. Prepare the appropriate entries for both Red Baron Flying Club and Bidwell Leasing on January 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Prepare the appropriate entries for both Red Baron Flying Club and Bidwell Leasing on January 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Round your intermediate and final answers to nearest whole dollar.) No Date General Journal Debit Credit 1 695.470 January 01, 2018 Right-of-usa asse Lease payable 695 470 2 125,000 January 01, 2018 Lease payable Cash 125.000 3 695,470 0 % January 01, 2018 Lease recevable Cost of goods sold Equipment Sales revenue x X 0 0 4 0 % January 01, 2018 Laaso receivable Cash 03 6 125.000 January 01, 2018 Cash Lease receivable 125.000 3 > Journal entry worksheet Record the lease for Bidwell Leasing. Note: Erter debits before credits Credit Date January 01, 2018 General Journal Lease receivable Cost of goods sold Equipment Sales revenue Debit 695.470 0 0 0 Record entry Clear entry View general Journal Journal entry worksheet