Franklin Co. leased its manufactured equipment to Parker Inc. for a four-year term. Franklin Co. reported a book value of $115,500 for the equipment in its inventory account. The lease commenced on January 1 with the first annual payment of $38,850 due immediately. The equipment has a useful life of four years, an estimated fair value of $144,648, and no residual or salvage value. The implicit rate of the lease is 5% and collectibility of the lease payments from Parker is probable.

Record Franklins journal entries at the commencement of the sales-type lease for the (1) lease receivable and (2) receipt of the first payment.