Rex Corporation (lessor) and Lee Company (lessee) agreed to a lease with the following information:

• Rexs carrying value of the underlying asset (inventory item) was $400,000
• Lease term is four years, beginning January 1, 2020. Lease payments are made each January 1, beginning January 1, 2020.
• Estimated useful life of the underlying asset is four years. Estimated residual value at the end of the lease is zero.
• Sales price of the underlying asset on January 1, 2020, was $460,000.
• Rexs implicit interest rate is 8% on retail price (known to Lee)
• Rex paid commission and legal fees in securing the lease of $5,000 on January 1, 2020.
• Rex expects to collect all payments from Lee.

Required: a. Compute the lease payment for the lessor and the lease receivable to be capitalized by the lessor.

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b. Provide the entries for the lessor during 2020.