Hayes Corp. is a manufacturer of truck trailers. On January 1, 2018, Hayes Corp. leases ten trailers to Lester Company under a six-year noncancelable lease agreement. The following information about the lease and the trailers is provided:

1.Equal annual payments that are due on January 1 each year provide Hayes Corp. with an 8% return on net investment (present value factor for 6 periods at 8% is 4.99271).

2.Titles to the trailers pass to Lester at the end of the lease.

3.The fair value of each trailer is $60,000. The cost of each trailer to Hayes Corp. is $54,000.Each trailer has an expected useful life of nine years.

4.Collectibility of the lease payments is probable

calculate the annual lease payment and prepare the journal entries for the lessor for 2018 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue.