lessor leasing co. agrees to provide lessee co. with equipment under a 5 yr uncancelable lease. the equipment has a 5 yr life, cost lessor 30000, and will have no residual value when the lease ends. lessee agrees to pay all executory costs (500 per year) throughout the lease period. on 1-1-13 the equipment is delivered. lessor expects a 14% return . the 5 equal annual payments are payable in advance starting 1-1-13.

1. assuming this is a direct finance lease for the lessor and a capital lease for the lessee, prepare a table summarizing the lease and interest payments suitable for either party.

2. assume both companies adjust and close books on 12-31, prepare journal entries relating to the lease for both companies through 12-31-13 based on data derived in the tableusing straight line method