Please explain proper steps by Step and Do Not Give Solution In Image Format ? And Fast Answering Please ? Instructions1Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease for 5 years. The equipment has a 5-year life, costDiego $25,000, and will have no residual value when the lease term ends. The fair value of the equipment is $30,000. La Jolla agrees to pay all executory costs($500 per year) throughout the lease period directly to a third party. On January 1, 2019, the equipment is delivered. Diego expects a 14% return on its netinvestment. The five equal annual rents are payable in advance starting January 1, 2019.1. Assuming this is a sales-type lease for the Diego and a finance lease for the La Jolla, prepare a table summarizing the lease and interest payments suitable foruse by either party.23Required:1. Assuming this is a sales-type lease for the Diego and a finance lease for the La Jolla, prepare a table summarizing the lease and interestpayments suitable for use by either party.2. Next Level On the assumption that both companies adjust and close books each December 31, prepare journal entries relating to the lease forboth companies through December 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by thestraight-line method.Show Transcribed Text45 January 1, 20196 January 1, 20197 December 31, 2019January 1, 2020December 31, 202010 January 1, 202111 December 31, 202112 January 1, 202213 December 31, 202214 January 1, 2023Diego CompanyDateShow Transcribed TextDATE3Kequired2a. On the assumption that Diego Leasing Company adjust and close books each December 31, prepare journal entries relating to the lease for the companythrough December 31, 2020, based on data derived in the tablePrepare journal entries for Diego Leasing Company, Lessor, for 2019.ACCOUNT TITLELease RentalCollectedcGENERAL JOURNALUnpaid ObligationInterest at 14% onLease ReceivablePOST. REF.LiabiutyDEBITLease ReceivablePAGE 1CREDIT Prepare journal entries for Diego Leasing Company, Lessor, for 2020.Show Transcribed Text2DATE5DATEShow Transcribed TextGeneral Journal-Lessee32c. On the assumption that La Jolla Company adjust and close books each December 31, prepare journal entries relating to the lease for the company throughDecember 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straight-line method.Prepare journal entries for La Jolla Company, Lessee, for 2019.ACCOUNT TITLEDATEGENERAL JOURNALACCOUNT TITLEGENERAL JOURNALPrepare journal entries for La Jolla Company, Lessee, for 2020.3ACCOUNT TITLEĈcGENERAL JOURNALPOST. REF.POST. REF.POST. REF.DEBITDEBITDEBITPAGE 1PAGE 1CREDITCREDITPAGE 1CREDIT

Leasing- It refers to the agreement under which the lessor allows to take advantage of the assets to…

Instructions Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease for 5 years. The equipment has a 5-year life, cost Diego $25,000, and will have no residual value when the lease term ends. The fair value of the equipment is $30,000. La Jolla agrees to pay all executory costs ($500 per year) throughout the lease period directly to a third party. On January 1, 2019, the equipment is delivered. Diego expects a 14% return on its net investment. The five equal annual rents are payable in advance starting January 1, 2019. Required: 1. Assuming this is a sales-type lease for the Diego and a finance lease for the La Jolla, prepare a table summarizing the lease and interest payments suitable for use by either party. 2. Next Level On the assumption that both companies adjust and close books each December 31, prepare journal entries relating to the lease for both companies through December 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straight-line method. Show Transcribed Text