Lessee Company enters into a 6-year finance lease of non-specialized equipment with Lessor Company on January 1. Lessee has agreed to pay $28,000 annually beginning immediately on January 1. The lease includes an option for the lessee to purchase the equipment at $3,000, which is $2,000 below the estimated fair value at lease end. Lessee Company is reasonably certain that it will exercise the purchase option. The economic life of the asset is 7 years. The lessees incremental borrowing rate is 7% and the lessors implicit rate is not readily determinable by the lessee. Record Lessee Companys journal entries on (a) January 1 and (b) December 31, assuming that the lease is properly classified as a finance lease. Note: Round your final answers to the nearest whole dollar

Recording Finance Lease Journal Entries- Purchase Option Lessee Company enters into a 6 -year finance lease of non-specialized equipment with Lessor Company on January 1 . Lessee has agreed to pay $28,000 annually beginning immediately on January 1 . The lease includes an option for the lessee to purchase the equipment at $3,000, which is $2,000 below the estimated fair value at lease end. Lessee Company is reasonably certain that it will exercise the purchase option. The economic life of the asset is 7 years. The lessee's incremental borrowing rate is 7% and the lessor's implicit rate is not readily determinable by the lessee. Record Lessee Company's journal entries on (a) January 1 and (b) December 31 , assuming that the lease is properly classified as a finance lease. Note: Round your final answers to the nearest whole dollar