Phelps Company leases a building to Walsh, Inc. on January 1, 2017. The following facts pertain to the lease agreement.

The lease term is 5 years, with equal annual rental payments of $4,703 at the beginning of each year.

Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.

The building has a fair value of $23,000, a book value to Phelps of $16,000, and a useful life of 6 years.

At the end of the lease term, Phelps and Walsh expect there to be a residual value of $4000.

Phelps wants to earn a return of 8% on the lease, and collectiblity of the payments is probable. This rate is know by Walsh.

Use the information in the above scenario to prepare the 2017 journal entries for the LESSOR. Assume the residual value is guaranteed and the expected residual value is $4000