Castle Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Jan Way Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:

1.		Jan Way has the option to purchase the equipment for $16,000 upon termination of the lease. It is not reasonably certain that Jan Way will exercise this option.
2.		The equipment has a cost of $120,000 and fair value of $160,000 to Castle Leasing. The useful economic life is 2 years, with a residual value of $16,000.
3.		Castle Leasing desires to earn a return of 5% on its investment.
4.		Collectibility of the payments by Castle Leasing is probable.

Prepare the journal entries on the books of Castle Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit 7 1/1/20 1/1/20 D Ylease Receivable se Receivable 160000 12/31/20 3 cash 56732 T Lease Receivable 40732 T Interest Revenue 16000 12/31/21. cash 12/31/21 - 56732 Lease Receivable 44805 Interest Revenue 11927