On January $1$ of the current year, Company A leased equipment under a two$-$year operating lease agreement from Company B$,$ which routinely finances equipment for other firms at an annual interest rate of $4\%.$

The contract calls for four rent payments of $$18,000$ each, payable semiannually on June $30$ and December $31$ each year.

The equipment was acquired by Company B at a cost of $$106,000$ and was expected to have a useful life of five years with no residual value.

Both firms record amortization and depreciation semiannually.

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:

Prepare appropriate journal entries recorded by Company A for the first year of the lease.

Prepare appropriate journal entries recorded by Company B for the first year of the lease.