On December 31st 2023 the City of Mordor leased a piece of equipment from the Gandoff Company for 5 years agreeing to make annual payment of $40,000 beginning December 31, 2023 At the end of the fifth year Mordor will return the equipment which has a 25 year life to Gandoff and Mordor has not guaranteed any residual value. Using Mordor's borrowing rate the present value of the payments is $166795. Mordor's borrowing rate is 10% 

REQUIRED: Make the journal entries the City of Mordor will make in 2023 and 2024 in connection with this piece of equipment including the signing of the lease.