From : Intermediate Accounting (2nd Edition) I need help with E18-8.

E18-8. Classification as Finance or Operating Lease, Lessor, Journal Entries. Guaranteed Residual Value. Using the same informiation presented in E18-7, complete the following requirements:

Required a. Prepare the entries for the lessor, SBE, for the first year of the lease. Determine the implicit rate b. Would the accounting for the lessor change if a third party guarantees a residual value of $20.000 and collection of this amount is probable? c. Prepare the amortization tables needed (if any) to account for the lease using the part (b) assumption. {E18-7. Classification as Finance or Operating Lease, Lessee, Journal Entries, Amortization Tables, Unguaranteed Residual Asset, Annuity Due.

On January 1, Gump Sales Company entered into an agreement to lease a piece of machinery for a period of 5 year- from Smokey Boy Equipment (SBE)- The machine is not specialized for Gump's business needs, has a sales price of $70,000, and its useful life is 7 years with no guaranteed residual value. The $ 15,000 annual rentals are due on January I of each year. The lease does not contain a transfer of ownership or a purchase option. Assume that there are no initial direct costs associated with this lease. There are also no non-lease components. SBE's implicit rate is not known to Gump whose incremental borrowing rate is 13%. The carrying value of the equipment lo SBE is $70,000, its fair value. Assume that collectability of all lease payments is reasonably assured. Gump's fiscal year ends on December 31 . Required a. Determine the lease classification for Gump Sales. b. Prepare the joumal enuies over Years 1 3 for Gump Sales based on your answer to part (a). c Include an amortization table for the lease liability and right-of-use asset.}