Jane Elk Equipment Manufacturer (JEEM) manufactures heavy equipment used in the construction industry. The equipment has a useful life of 20 years with a nominal salvage value after that time.

On January 1, 2019, JEEM entered into a 12-year noncancelable lease agreement with Deluxe Home Construction Company with the following lease terms:

• Annual lease payments due at the beginning of each year, starting Jan.1, 2019 $ 26,659

• JEEMs manufacturing cost of the equipment $ 180,000
• Normal selling price of the equipment $ 300,000
• Residual value of the equipment at the end of the lease term

(not guaranteed by Deluxe Home Construction) $ 60,000

• Interest rate implicit in the lease 5%
• JEEM appropriately classifies this lease as a sales-type lease.

Present value factors for n = 12 are as follows:

	i = 5%
present value of single sum	0.55684
present value of ordinary annuity	8.86325
present value of annuity due	9.30641

REQUIRED (round amounts in journal entries to the nearest dollar):

(1) Prepare the appropriate journal entries for JEEM (the lessor) at Jan. 1, 2019.

(2) Prepare the appropriate journal entries for JEEM at Dec. 31, 2019 (the end of the fiscal year).