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Problem 4 (20%) Baker Hotel is one of the largest hotels in the Windsor area. On Jan. 1, 2016, the company signed a contract to lease a large furnace from Reagan HVAC Co. The lease was for 6 years, commencing immediately on January 1, 2016. The annual lease payment was set at $19,200, including $1,200 for maintenance and repair, to be made at the beginning of each year, The leasing contract granted Baker Hotel (lessee) the right to purchase the furnace at the end of the lease at $28,000 when the furnace was expected to be worth twice as much. The furnace had a useful life of 12 years with no residual value. Reagan's (lessor) expected rate of return on the lease was 6%, and this was known to Baker Hotel the lessee. Baker Hotel had a Dec. 31 year end and followed IFRS. Required: (1) Prepare journal entries Baker Hotel was required to make on Jan. 1, 2016. (Must show work using present value factors from the attached tables.) (2) Prepare an amortization table for Baker Hotel for the lease term (6 years) (3) Prepare journal entries Baker Hotel was required to make in 2016 after Jan. 1. (4) Prepare journal entries Baker Hotel was required to make in 2021. Assume that Baker Hotel exercised the option to purchase the farmace at $28,000 at the end of that year

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