On January 1, Year 1, Drake Co. leased equipment from Brewer, Inc. Lease payments are $100,000, payable annually every December 31 for 20 years. Title to the equipment passes to Drake at the end of the lease term. The lease is noncancelable. Additional Facts:

The equipment has a $750,000 carrying amount on Brewer’s books. Its estimated economic life was 25 years on January 1, Year 1.
The rate implicit in the lease, which is known to Drake, is 10%.
Drake’s incremental borrowing rate is 12%.
Drake normally uses the straight-line method of depreciation for equipment.
The economic life of the equipment did not change as a result of the lease.
The rounded present value factors of an ordinary annuity for 20 years are as follows:

12% 7.5
10% 8.5

Required:
a. Record the journal entries for the following accounts for Drake on January 1, Year 1, if any.
b. Record the journal entries for the following accounts for Drake on December 31, Year 1, if any.
c. Record the journal entries for the following accounts for Drake on December 31, Year 1, if any.
d. Record the amounts for the following accounts in Drake's December 31, Year 2, balance sheet.

Cardinal company is considering a project that would require a $2,725,000 investment in equipment with a useful life of five years. at the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. the company’s discount rate is 14%. the project would provide net operating income each year as follows: sales $2,867,000 variable expenses 1,125,000 contribution margin 1,742,000 fixed expenses: advertising, salaries, and other fixed out-of-pocket costs $706,000 depreciation 465,000 total fixed expenses 1,171,000 net operating income $571,000 1. which item(s) in the income statement shown above will not affect cash flows? (you may select more than one answer. single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. any boxes left with a question mark will be automatically graded as incorrect.) (a)sales (b)variable expenses (c) advertising, salaries, and other fixed out-of-pocket costs expenses (d) depreciation expense 2. what are the project’s annual net cash inflows? 3.what is the present value of the project’s annual net cash inflows? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 4.what is the present value of the equipment’s salvage value at the end of five years? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 5.what is the project’s net present value? (use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)