On January 1, 2024, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 10% rate of return for providing long-term financing. The lease agreement specified the following:

Ten annual payments of $63,000 beginning January 1, 2024, the beginning of the lease and each December 31 thereafter through 2032. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $364,987. The lease qualifies as a finance lease/sales-type lease. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $9,000 per year are specified, beginning January 1, 2024. NRC was to pay this cost as incurred, but lease payments reflect this expenditure. A partial amortization schedule, appropriate for both the lessee and lessor, follows: 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)

Payments Effective Interest (10% Outstanding balance) Decrease in Balance Outstanding Balance 364,987 1/1/2024 54,000 54,000 310,987 12/31/2024 54,000 0.1(310,987) = 31,099 22,901 288,086 12/31/2022 54,000 0.1(288,086) = 28,809 25,191 262,895 Required: Prepare the appropriate entries for the lessee related to the lease on January 1, 2024 and December 31, 2024. Prepare the appropriate entries for the lessor related to the lease on January 1, 2024 and December 31, 2024.

Required 1: Record lease by lessee.

Record the cash payment.

Record the cash payment.

Record the amortization.

Required 2: Record lease by lessor.

Record the cash received (include maintenance fee accrual).

Record cash received by lessor.