Flounder Company, a machinery dealer, leased manufacturing equipment to Mays Corporation on January 1, 2017. The lease is for a 7-year period and requires equal annual payments of $25,349 at the beginning of each year. The first payment is received on January 1, 2017. Flounder had purchased the machine during 2016 for $98,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Flounder. Flounder set the annual rental to ensure an 6% rate of return. The machine has an economic life of 8 years with no residual value and reverts to Flounder at the termination of the lease.

A. Compute the amount of the lease receivable. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

B. Prepare all necessary journal entries for Flounder for 2017