16 On January 1, 2018, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earrn NRC a 11% rate of return for providing long-term financing. The lease agreement specified 10 points a. Ten annual payments of $74,000 beginning January 1, 2018, the beginning of the lease and each December 31 thereafter through 2026 b. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $424,908 C. The lease qualifies as a finance lease/sales-type lease d. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as Skipped required. Payments of $9,000 per year are specified, beginning January 1, 2018. NRC was to pay this cost as incurred, but lease payments reflect this expenditure eBook e. A partial amortization schedule, appropriate for both the lessee and lessor, follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Print Decrease in Balance Outstanding Balance Effective Interest (11% Outstanding balance) Payments References 1/1/2018 65,000 12/31/2018 65,000 12/31/2019 65,000 65,000 25,410 28,205 424,908 359,908 334,498 306,293 0.11 (359,908)39,590 0.11 (334,498) = 36,795 Required 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2018 and December 31, 2018 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2018 and December 31, 2018