On January 1, 2018, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2021, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $413,307 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2018, to be $51,000. Negotiations led to Maywood guaranteeing a $71,500 residual value.

Equal payments under the lease are $102,000 and are due on December 31 of each year with the first payment being made on December 31, 2018. Maywood is aware that Aqua used a 6% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

1. & 2. Prepare the appropriate entries for Maywood on January 1, 2018 and December 31, 2018, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)