Refer to the lease agreement described in the previous exercise. Assume the contract specified that NRC (the lessor) was to pay, not only the $5,000 maintenance fees, but also insurance of $700 per year, and was to receive a $250 management fee for facilitating service and paying executory costs. The lessee's lease payments were increased to include an amount sufficient to reimburse executory costs plus NRC's fee.

Required:

Prepare the appropriate entries for both the lessee and lessor to record the second lease payment, executory costs, and depreciation (straight line) on December 31, 2011.