On December 31, 2011, Parent sold equipment with a historical cost of $50,000 and accumulated depreciation of $30,000 to the Subsidiary for $40,000. Subsidiary began using the equipment on January 1, 2012, the equipment had an estimated useful life of eight years.

On January 1, 2012 Parent purchased equipment for $194,110 and immediately leased the equipment to the Subsidiary on a 4-year lease. The equipment lease payments of $60,000 are to be made annually every January 1st beginning immediately, for a total of 4 payments. The implicit interest rate is 12%. The lease provides for an automatic transfer of title to the Sub at the end of the lease. The estimated useful life of the lease is 5 years. The lease has been capitalized by both companies. The lease amortization schedule is as follows:

Date	Payment	Interest on prev balance	Gross Receivable	Unearned Interest	Carrying Value
1/1/12			240,000	(35,890)	204,110
1/1/12	60,000		180,000	(35,890)	144,110
1/1/13	60,000	17,293	120,000	(18,597)	101,403
1/1/14	60,000	12,168	60,000	(6,429)	53,571
1/1/15	60,000	6,429	0	0	0

1) Make all of the entries pertaining to intercompany sales of equipment

2) Make all of the entries pertaining to intercompany leases