On 2 January 20X2, the National Leasing Company, a leasing subsidiary of a major Canadian chartered bank, entered into a lease with Alphon Limited (the lessee) for computer equipment. Terms of the lease are as follows:

- The initial lease term is two years, with payments due each 31 December, at the end of each lease year.

- Payments are \(\$ 16,000\) per year, including \(\$ 2,000\) for maintenance costs.
- The lease is renewable for a further three years at the option of National Leasing Company, for \(\$ 9,000\) per year.
- At the end of the second lease term, the computer equipment will likely have a \(\$ 1,000\) value. National Leasing Company will resell the equipment at this time.
- National Leasing Company bought the equipment from Command Computers for \(\$ 46,550\) in order to lease it to Alphon.
Assume that the maintenance cost is paid by National Leasing Company to a third party every 31 December. Assume also that the National Leasing Company has a 31 December year-end.
Required:
1. What interest rate is implicit in the lease?
2. Prepare an amortization schedule that shows how the net lease receivable is reduced over the life of the lease.
3. Prepare journal entries to record the lease for \(20 \mathrm{X} 2\) and \(20 \times 3\) using the net method.
4. Prepare journal entries to record the lease for \(20 \times 2\) and \(20 \times 3\) using the gross method.