Berne Company $($lessor$)$ enters into a lease with Fox Company to lease equipment to Fox beginning January $1,$ Year $1.$ The lease terms, provisions, and related events are as follows:

The lease term is $4$ years. The lease is noncancelable and requires annual rental payments of $$50,000$ to be made at the end of each year.

The equipment costs $$130,000.$ The equipment has an estimated life of $4$ years and an estimated residual value at the end of the lease term of zero.

Fox agrees to pay all executory costs directly to a third party.

The interest rate implicit in the lease is $12\%.$

The initial direct costs are insignificant and assumed to be zero.

The collectability of the rentals is reasonably assured.

Required:

Next Level Assuming that the lease is a sales$-$type lease from Berne's point of view, calculate the selling price and assume that this is also the fair value.

Prepare a table summarizing the lease receipts and interest income earned by Berne.

Prepare joumal entries for Beme, the lessor, for Year $1$ and Year $2.$