On January 1, the lessor company purchased a piece of equipment for $50,000. The equipment has an expected salvage value of $1,987; this amount is not guaranteed. The lessor company immediately leased the equipment under a direct financing lease agreement. The lease calls for the lessor company to receive annual lease payments of $7,800 per year for 10 years, to be received at the beginning of the year; at the end of 10 years, the equipment is returned to the lessor company. The interest rate implicit in the lease is 12%. Make the journal entries necessary on the lessor’s books to record

(1) The signing of the lease,

(2) The receipt of the initial $7,800 lease payment on the lease-signing date,

(3) The recognition of interest revenue at the end of the first year, and

(4) The journal entry at the end of 10 years to record the final interest revenue accrual and the recovery of the equipment, assuming that the salvage value was equal to its estimated amount.