On January 1, 2021, Rick's Pawn Shop leased a truck from Corey Motors for a six-year period with an option to extend the lease for three years. Rick's had no significant economic incentive as of the beginning of the lease to exercise the 3-year extension option. Annual lease payments are $12,000 due on December 31 of each year, calculated by the lessor using a 7% discount rate. Assume that at the beginning of the third year, January 1, 2023, Rick's had made significant improvements to the truck whose cost could be recovered only if it exercises the extension option, creating an expectation that extension of the lease was "reasonably certain." The relevant interest rate at that time was 8% (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry, if any, at the beginning of the third year for the lessee to account for the reassessment. 2. Prepare the journal entry, if any, at the beginning of the third year for the lessor to account for the reassessment. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entry, if any, at the beginning of the third year for the lessee to account for the reassessment. (If no e required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and to nearest whole dollar.) View transaction list Journal entry worksheet Record the improvements to the truck by Rick's. Note: Enter debits before credits Date General Journal Debit Credit January 01, 2023 Right-of-use asset Lease payable Record entry Clear entry View general journal C. Required 1 Required 2 >