Classico Kitchen Cutlery manufactures and leases kitchen appliances to bars and restaurants. Wendell's Hamburgers signed a lease for a walk-in freezer. The information pertaining to the capital lease is as follows:

Classico and Wendell signed the lease on December 31, 2025

Lease duration: 5 years beginning December 31, 2025

Leased asset's estimated economic life: 6 years

Estimated residual value: $15,000, not-guaranteed by lessee

Lease payments: $60,000/year, beginning December 31, 2025

Leased asset's cost to Classico to manufacture: $180,000

Lease provisions: Lease does not contain a bargain renewal or a bargain purchase option.

Implicit lease interest rate: 10%

Present Value of $1 of 5 periods at 10% is .6209

Present Value of $1 annuity of 5 periods at 10% is 3.7908.

Present Value of $1 annuity due of 5 periods at 10% is 3.9763

Present Value of $1 of 6 periods at 10% is .56447

Present Value of $1 annuity of 6 periods at 10% is 4.32566

Present Value of $1 annuity due of 6 periods at 10% is 4.79079

Classico has determined that the collectability of lease payments is reasonably predictable and there are no important uncertainties regarding costs yet to be incurred by the lessor.

1. Record Classico's journal entries for 2025 - 2027 assuming this is a sales-type lease.
2. Record Wendell's journal entries for 2025 - 2027 assuming this is a financing lease.