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Sunland Corporation enters into a $5-$year lease of equipment on December $31,2024,$ which requires $5$ annual payments of $$36,900$ each, beginning December $31,2024.$ In addition, Sunland guarantees the lessor a residual value of $$21,400$ at the end of the lease. However, Sunland believes it is probable that the expected residual value at the end of the lease term will be $$11,400.$ The equipment has a useful life of $5$ years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $$120,000.$

Prepare Lost Ark's $2024$ and $2025$ journal entries, assuming the implicit rate of the lease is $10\%$ and this is known to Sunland. $($Record journal entries in the order presented in the problem. Credit account tities are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. List all debit entries before credit entries. For calculation purposes, use $5$ decimal places as displayed in the factor table provided and round final answers to $0$ decimal ploceses. $5\mathrm{.}275.)$

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Date Account Titles and Explanation

Debit

Credit

$($To record the lease$)$

$($To record receipt of lease payment$)$

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