On January 1, 2016, NRC Credit Corporation leased equipment to Brand Services under a direct financing lease designed to earn NRC a 13% rate of return for providing long-term financing. The lease agreement specified:

a.	Ten annual payments of $56,000 (including executory costs) beginning January 1, 2016, the inception of the lease and each December 31 thereafter through 2024.
b.	The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $309,649.
c.	The lease qualifies as a capital lease to Brand.
d.	A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $5,500 per year are specified, beginning January 1, 2016. NRC was to pay this executory cost as incurred, but lease payments reflect this expenditure.
e.	A partial amortization schedule, appropriate for both the lessee and lessor, follows:

	Payments	Effective Interest	Decrease in Balance	Outstanding Balance
(13% Outstanding balance)
				309,649
1/1/16	50,500		50,500	259,149
12/31/16	50,500	0.13 (259,149) = 33,689	16,811	242,338
12/31/17	50,500	0.13 (242,338) = 31,504	18,996	223,342

Required:

Prepare the appropriate entries for both the lessee and lessor to record (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.):

1.	The lease at its inception.
2.	The second lease payment and depreciation (straight line) on December 31, 2016.

1)Record lease by lessee.

2)Record the cash payment.

3)Record the cash payment.

4)Record depreciation.

5)Record lease by lessor (include maintenance fee accrual).

6)Record the cash received (include maintenance fee accrual).

7) Record cash received by lessor.