(2) Start owners' equity - a separate schedule will be provided. PROBLEM 1 Lessee signs a five-year agreement to lease equipment from Lessor Corporation. Payments are to be made the first day of each year. The lease payments are set at $23,981.62 providing a 10% rate of return to the lessor. The lease starts 1/1/2023 (the day of the first payment) 1. Assume the lease is classified as a finance lease. Prepare the lessee's journal entries on January 1, 2023, December 31, 2023, and January 1, 2024 [Note: the second payment is on 1/1/2024 not 12/31/2023]. Two adjusting entries are required at 12/31/2023: one to accrue interest and one to amortize the right-of-use asset. Assume that adjusting journal entries are only prepared annually. Discuss the income statement effects of this lease for 2023. 2. Assume the lease is classified as a finance lease. Determine the asset and liability the lessee will report on its December 31, 2023 balance sheet (because of this lease). 3. Assume the lease is classified as a sales-type lease without a selling profit by the lessor (the fair value of the leased property at lease inception is $100,000 and the lessor's cost is $100,000 ). Prepare the lessor's journal entries on January 1, 2023, December 31, 2023, and January 1,2024 related to this lease. 4. Assume the lease is classified as a sales-type lease with a selling profit by the lessor (the fair value of the leased property at lease inception is $100,000 and the lessor's cost is $70,000 ). Prepare the lessor's journal entries on January 1,2023 , assuming the property is carried on the lessor's book as inventory (immediately before the lease commences). Determine the lessor's gross profit on this lease. 5. Assume the lease is classified as an operating lease by the lessee. Prepare the lessee's journal entries on January 1, 2023, December 31, 2023, and January 1, 2024. Determine the lease expense that lessee will report on its 2023 income statement. 6. Assume the lease is classified as an operating lease by the lessor. Prepare the January 1 , 2021, December 31, 2023, and January 1, 2024 journal entries for the lessor. Assume an 8 -year useful life for the equipment. Further assume that the lessor's original cost for the equipment was $200,000 and no expected residual value for the equipment. (2) Start owners' equity - a separate schedule will be provided. PROBLEM 1 Lessee signs a five-year agreement to lease equipment from Lessor Corporation. Payments are to be made the first day of each year. The lease payments are set at $23,981.62 providing a 10% rate of return to the lessor. The lease starts 1/1/2023 (the day of the first payment) 1. Assume the lease is classified as a finance lease. Prepare the lessee's journal entries on January 1, 2023, December 31, 2023, and January 1, 2024 [Note: the second payment is on 1/1/2024 not 12/31/2023]. Two adjusting entries are required at 12/31/2023: one to accrue interest and one to amortize the right-of-use asset. Assume that adjusting journal entries are only prepared annually. Discuss the income statement effects of this lease for 2023. 2. Assume the lease is classified as a finance lease. Determine the asset and liability the lessee will report on its December 31, 2023 balance sheet (because of this lease). 3. Assume the lease is classified as a sales-type lease without a selling profit by the lessor (the fair value of the leased property at lease inception is $100,000 and the lessor's cost is $100,000 ). Prepare the lessor's journal entries on January 1, 2023, December 31, 2023, and January 1,2024 related to this lease. 4. Assume the lease is classified as a sales-type lease with a selling profit by the lessor (the fair value of the leased property at lease inception is $100,000 and the lessor's cost is $70,000 ). Prepare the lessor's journal entries on January 1,2023 , assuming the property is carried on the lessor's book as inventory (immediately before the lease commences). Determine the lessor's gross profit on this lease. 5. Assume the lease is classified as an operating lease by the lessee. Prepare the lessee's journal entries on January 1, 2023, December 31, 2023, and January 1, 2024. Determine the lease expense that lessee will report on its 2023 income statement. 6. Assume the lease is classified as an operating lease by the lessor. Prepare the January 1 , 2021, December 31, 2023, and January 1, 2024 journal entries for the lessor. Assume an 8 -year useful life for the equipment. Further assume that the lessor's original cost for the equipment was $200,000 and no expected residual value for the equipment