On January $1,2024,$ a company signed a $6-$year non$-$cancelable lease for a printing press.

$$ The fair value and the present value of the minimum lease payments are both $$500,000.$

$$ The lease requires annual payments of $$108,582$ at the beginning of each year, starting January $1,2024.$

$$ The lessor$$s implicit rate is $12\%$ and the lessee knows this.

Please round all your answers to the nearest dollar.$$

Lessee: Financing Lease

$1.$ Prepare the two journal entries that would be required on $1/1/24$ by the lessee.

$2.$ Prepare the two journal entries that would be required on $12/31/24$ by the lessee.

$3.$ When the lessee prepares its $12/31/24$ balance sheet, how much of the lease payable would be considered current and how much would be noncurrent?

$4.$ Prepare the journal entry that the lessee would prepare on $1/1/25$ for the second cash payment.

$$

Lessor: Sales$-$Type $($Financing$)$ Lease

Assume that the lessor$$s amortization schedule happens to match the lessee$$s $($this won$$t always be the case$).$ Given that information, what journal entries would the lessor record on:

$5.1/1/24,$ on the inception of the lease. The asset$$s cost to the lessor was $450,000.$ There should be $2$ entries for the inception $($not the entry for receiving the first payment$).$

$6.1/1/24,$ on receiving the first payment.

$7.12/31/24$:

$8.1/1/25$: