Sheffield Inc, manufactures an X-ray machine with an estimated life of 12 years and leases it to Chambers Medical Center for a period of 10 years. The normal selling price of the machine is $502,471, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $15,500. The hospital will pay rents of $60,800 at the beginning of each year. Sheffield incurred costs of $242,000 in manufacturing the machine and $14,700 in legal fees directly related to the signing of the lease. Sheffield has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%. Beginning of Year Annual Lease Payment Plus Residual Value Interest on Lease Receivable Recovery of Lease Receivable Lease Receivable Initial PV 502471 60300 60800 60300 1 60800 20148 9999 441671 402955 362302 319617 274798 38716 40652 426851 44819 47050 60300 60800 15981 60800 13740 227738 60800 11387 49413 178325 60300 8916 18841 126441 60800 544781 71963 60800 7202) End of 10 15500 752 623500 502471 Prepare all of the lessor's journal entries for the first year. (Credit account titles are automatically indented wh to 0 decimal places e.g. 5,275.) No. Account Titles and Explanation Debit Credit (To record the lease.) (To record the incurrence of initial direct costs relating to the lease.) 2. (To record receipt of the first lease payment.) (To record interest earned during the first year of the lease.)