Sam Inc. leased a photocopier on January 1, 2019, for a three-year period. Payments, which are first due on the commencement date, are $3,000 per year. The $3,000 is comprised of $2,500 for the photocopier rental, $400 for a maintenance agreement, and $100 for an environmental tax that the lessor collects on behalf of the federal government. The first payment is due on the commencement date. The asset returns to the lessor at the end of the lease term. Sam, which has an incremental borrowing rate of 5% per annum, is unable to readily identify the interest rate implicit in the lease. Sam has a December 31 year end and depreciates all assets on a straight-line basis. 

Required:

a. Assume that Sam Inc. elects to account for the lease and non-lease components of the contract as a single lease component. Prepare the journal entries for 2019 and January 1, 2020. 

b. Assume that Sam Inc. does not elect to account for the lease and non-lease components of the contract as a single lease component. Prepare the journal entries for 2019 and January 1, 2020.