Pharoah Corporation $("$Pharoah$)$ manufactures equipment with an estimated economic life of $14$ years. On May $30,2023,$ Pharoah

leases it to Gadget Corporation $("$Gadget$")$ for a period of $10$ years. Details of the lease are as follows:

$,$ Equipment has a fair value and cost at the inception of the lease: $$188,219.$

$,$ Guaranteed residual value: $$28,000.$

$,$ Annual lease payment, due at beginning of each year: $$26,250.$

$,$ Lease contains no renewal options and the equipment reverts to Pharoah at the end of the lease.

$,$ Gadget's incremental interest rate, as well as implicit rate is $10\%.$

$,$ Gadget uses straight$-$line depreciation for similar equipment that it owns.

$,$ Pharoah has determined that collectibility of lease payments is reasonably predictable and that no additional costs will be

incurred.

Assume both companies follow ASPE.

Prepare the journal entries for the lessee and lessor at May $30,2023,$ the inception of the lease, and at December $31,2023,$ which