Source Jewelers Incorporated signed a lease agreement on July $1,2023,$ to lease diamond$-$polishing equipment from Greece Industries. The following information is relevant to the lease agreement.

$($Click the icon to view the terms of the lease.$)$

Future Value of $$1$ table Future Value of an Ordinary Annuity table Future Value of an Annuity Due table

Present Value of $$1$ table Present Value of an Ordinary Annuity table Present Value of an Annuity Due table

Read the requirements.

Requirement a$.$ Determine the type of lease that Source Jewelers, the lessee, should record on its books.

future value tables or the formula method, use factor amounts rounded to five decimal places, $x.xxxxxx.$ Round your final answer to the nearest whole dollar.$)$

The present value $($PV$)$ of the payments due under the lease is

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The term of the lease is $6$ years with no renewal option. Payments of $$46,000$

are due on July $1$ of each year $($at the beginning of each period$).$

The fair value of the equipment at July $1,2023,$ is $$263,760.$ The equipment

has an economic life of $9$ years.

Source Jewelers depreciates similar equipment that it owns using

the straight$-$line method over the economic life of the property.

Source Jeweler's incremental borrowing rate is $6\%.$ Greece's implicit rate on

the lease is not known to Source Jewelers.

There are no nonlease components related to this lease.

Requirements

a$.$ Determine the type of lease that Source Jewelers, the lessee, should record

on its books.

b$.$ Prepare all journal entries necessary on the books of Source Jewelers for

$2023$ and $2024.$ Source Jewelers has a December $31$ year$-$end.