The lease agreement and related facts indicate the following:
a. Leased equipment had a retail cash selling price of $300,000. Its useful life was five years with no residual value.
b. Collectibility of the lease payments by the lessor was reasonably predictable and there were no costs to the lessor that were yet to be incurred.
c. The lease term is five years and the lessor paid $265,000 to acquire the equipment (sales-type lease).
d. Lessor's implicit rate when calculating annual lease payments was 8%.
e. Annual lease payments beginning January 1, 2011, the inception of the lease, were $69,571.
f. Costs of negotiating and consummating the completed lease transaction incurred by the lessor were $7,500.
Required:
Prepare the appropriate entries for the lessor to record:
1. The lease and the initial payment at its inception.
2. Any entry(s) necessary at December 31, 2011, the fiscal year-end.