On January $1,2024,$ Burrito Bill$$s leased restaurant equipment from Oval Corporation under a nine$-$year lease agreement. The lease agreement specifies annual payments of $$75,000$ beginning January $1,2024,$ the beginning of the lease, and at each December $31$ thereafter through $2028.$ The equipment was acquired recently by Oval at a cost of $$540,000($its fair value$)$ and was expected to have a useful life of $13$ years with no salvage value at the end of its life. $($Because the lease term is only $9$ years, the asset does have an expected residual value at the end of the lease term of $$150,000.)$ Oval seeks a $10\%$ return on its lease investments. By this arrangement, the lease is deemed to be an operating lease.

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)$

Required:

What will be the effect of the lease on Burrito Bill's earnings for the first year? $($ignore taxes$)$

What journal entries will the lessee record during $2024$ relating to this lease?

What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Burrito Bill$$s$?($ignore taxes$)$