Crabtree Products. Inc. leases machinery to Beane Poll Enterprises. The machinery is not specialized. The lease is for 3 years requiring payments of $22,500 at the beginning of each lease year (April 1). The equipment has a fair value of $ 82,833 and is carried in Crabtree's inventory at $ 72,833. The expected residual value for the asset is $25,000. Crabtree obtains a third-party residual value guarantee in the amount of $15,000. Therefore, the unguaranteed residual value is $10,000. Crabtree pays $2,000 in sales commissions related to the lease transaction. This lease is classified as a direct financing lease. Crabtree has a December 31 year-end.

Required

Prepare the journal entries for the lessor to account for this transaction over the 3-year period, and provide all supporting computations and amortization tables. Assume the machine has a fair value of $0 at the end of the lease.