The Lease Agreement and Related Facts Indicate the Following

Essay

The lease agreement and related facts indicate the following:
a. Leased equipment had a retail cash selling price of $900,000. Its useful life was five years with no residual value.
b. The lease term is five years and the lessor paid $795,000 to acquire the equipment (thus, selling profit).
c. Lessor's implicit rate when calculating annual lease payments was 8%.
d. Annual lease payments beginning January 1, 2018, the beginning of the lease, were $208,713.
e. The costs of legal fees incurred by the lessor for executing the completed lease transaction were $22,500.
Required:
Round your answers to the nearest whole dollar amounts.
Prepare the appropriate journal entries for the lessor to record:
1. The lease and the initial payment at its commencement.
2. Any journal entry(s) necessary at December 31, 2018, the fiscal year-end.