On July $1$ of Year $1,$ Stanley Company leased a small building and its site to East Company on a $$ve$-$year contract. The lease provides for an annual $$xed lease payment of $$40,000$ payable each July $1$ starting in Year $1.$ There is no renewal agreement. Stanley$$s accounts showed the following data on January $1$ of Year $1$: initial cost of the building, $$250,000($accumulated depreciation, $$60,000)$; estimated remaining life, $15$ years; and estimated residual value, $$10,000.$ The accounting period for each company ends December $31.$ Stanley Company appropriately classi$$es the lease as operating.

Required

a$.$ Provide journal entries for the lessor on July $1$ and December $31$ of Year $1$ and Year $2.$ Assume adjusting entries are recorded annually at December $31.$

b$.$ Instead, assume that the initial payment is still $$40,000,$ but the payment increases by $$1,000$ each year of the lease. Provide journal entries for the lessor on July $1$ and December $31$ of Year $1$ and Year $2.$