Lease lT (lessor) Company entered into a Truck lease with Use it Company on January 1, 2022. Annual lease payments of $7,000 are payable at the beginning of each year, starting on

January 1, 2022. The following information relates to this noncancelable lease:

Lease term (years) 6

Lessor's implicit interest rate 12%

Lessee's incremental borrowing rate14%

Fair value of lease asset $34,54837

Lessor's cost of lease asset $33,819

Estimated fair value $5,000

Guaranteed by lessee 0

The present value of an annuity due of $1 for 6 years at 12% is 4.60478 and at 14% is 4.43308. The present value of $1 for 6 years at 12% is .50663 and at 14% is .45559. Both the implicit interest rate and incremental borrowing rate are known by all parties. Both parties use straight line for any depreciation. The lease is correctly classified as a sales type lease for the lessor and a finance lease for the lessee. Write the journal entries on January 1, 2022 for the lessor or the lessee books.