Scape Corp. manufactures telephony equipment. Scape leased equipment to User, Inc. on January 1, 2018. Scape produced the equipment at a cost of $5,500,000.

Lease description:
Quarterly rental payments	$613,751 at beginning of each period
Lease term	4 years (16 quarters)
No residual value; no BPO
Economic life of equipment	4 years
Implicit interest rate and lessees incremental borrowing rate	8%
Fair value of asset	$8,500,000

Required: Prepare appropriate entries for both User and Scape from the beginning of the lease through the second rental payment on April 1, 2018. Depreciation and amortization are recorded at the end of each fiscal year (December 31).

• User Lessee
• Scape Lessor

Prepare appropriate entries for Scape from the beginning of the lease through the second rental payment on April 1, 2018. Depreciation and amortization are recorded at the end of each fiscal year (December 31). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.)

No	Date	General Journal	Debit	Credit
1	January 01, 2018	Lease revenue	8,500,000
		Cost of goods sold	5,500,000
		Sales revenue		8,500,000
		Equipment		5,500,000
2	January 01, 2018	Cash
3	April 01, 2018	Cash
		Lease receivable
		Interest revenue