Sarasota Corporation leased equipment to Metlock, Inc

Sarasota Corporation leased equipment to Metlock, Inc. on January 1, 2020. The lease agreement called for annual rental payments of $893 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 8 years, a fair value of $8,500, a book value of $6,500, and Sarasota expects a residual value of $6,000 at the end of the lease term. Sarasota set the lease payments with the intent of earning a 4% return, though Metlock is unaware of the rate implicit in the lease and has an incremental borrowing rate of 6%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

What is the amount of the rental payments used in the lease agreement? (Round answer to 0 decimal places, e.g. 5,275.) 
Rental payments A. 
SHOW LIST OF ACCOUNTS 
LINK TO TEXT 
LINK TO TEXT 
Prepare the entries for Sarasota for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) 
Date Account Titles and Explanation Debit Credit 
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• • 
• • 
(To record the recognition of the revenue) 
(To record depreciation expense on the leased equipment) 
 

How would Sarasota's accounting in part a change if it incurred legal fees of $600 to execute the lease documents and $400 in advertising expenses for the year in connection with the lease? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) 
Date 
Account Titles and Explanation 
Debit Credit 
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