Company A leased equipment from Company B on January 1, 2021. Company B manufactured the equipment at a cost of $600,000. Appropriate adjusting entries are made quarterly. The Lease term is 6 years with quarterly rent payments of 32,000 at January 1, 2021, and each subsequent quarter thereafter. The economic life of the asset is 6 years and the implicit interest rate is 8%.

1) Prepare the appropriate journal entries for Company A (the Lessee) to record this transaction at its beginning, January 1, 2021 and on March 31, 2021.

2) Prepare the appropriate journal entries Company B (the Lessor) to record this transaction at its beginning, January 1, 2021 and on March 31, 2021.

Briefly label (lessee or lessor JEs) and type out the journal entries described above. Round to the nearest whole number.

For example type Journal Entries in the following manner (with dr denoting debits and cr denoting credits

Dr. Depreciation Expense 432

Cr. Accumulated Depreciation 432