Recording Sales$-$Type Lease Journal Entries$-$ Residual Value

Smith, the lessee, signs an eight$-$year lease agreement on December $31$ for the floor of a building that requires annual payments of $$7,000,$

beginning immediately. The residual value of $$5,000$ is guaranteed to the lessor at the end of the lease term. Smith estimates a residual

value of $$3,000$ at the end of the lease term. Smith is aware of the lessor's implicit rate of interest of $7\%.$

Prepare the lessor's journal entries on December $31$ to record the $(1)$ lease receivable and $(2)$ receipt of the first payment, assuming that

the lease is properly classified as a sales$-$type lease. The carrying value of the equipment is $$45,000$ at the commencement of the lease.

Note: Round your answers to the nearest whole dollar.