Question 3 ( 40 points). On January 1, Year 1, Iger Company leased equipment to Bullock Comporation. The following information pertains to this lease. 1. The term of the noncancelable lease is 3 years, with no renewal option. The equipment reverts to the lessor at the termination of the lease on December 31, Year 3. 2. Equal rental payments are due on January 1 of each year, beginning in Year 1 . 3. The cost and fair value of the equipment on January 1, Year 1, are $144,000 and $180,000, respectively. 4. The equipment has an economic life of 3 years, with a guaranteed residual value of $8,000 (The expected residual value of the equipment at the end of the lease is $0 ). Bullock depreciates all of its equipment on a straight-line basis. 5. Iger set the annual rental to ensure an 11% rate of return. Bullock's incremental borrowing rate is 12%, and the implicit rate of the lessor is known to Bullock. 6. Collectibility of lease payments by the lessor is probable. 7. The fair value of the equipment is $1,500 at December 31 , Year 3. (Both the lessor and the lessee's accounting period ends on December 31.) Required a. Calculate the amount of the annual rental payment. (Round the final answer to the nearest dollar.) (2 points) b. Complete the following amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (Round all answers to the nearest dollar.) (15 points) c. Prepare all the necessary journal entries for Bullock for Year 3. (13 points) d. Prepare all the necessary journal entries for Iger for Year 3. (10 points)