Terms of a lease agreement and related facts were as follows: The lease asset had a retail cash selling price of $120,000. Its useful life was six years with no residual value (straight-line depreciation). Annual lease payments at the beginning of each year were $25,048, beginning January 1. Lessors implicit rate when calculating annual rental payments was 10%. Costs of $2,475 for legal fees for the lease execution were the responsibility of the lessor. Required: Prepare the appropriate entries for the lessor to record the lease, the initial payment at its beginning, and at the December 31 fiscal year-end under each of the following three independent assumptions:

1. The lease term is three years and the lessor paid $120,000 to acquire the asset (operating lease).

2. The lease term is six years and the lessor paid $120,000 to acquire the asset (sales-type lease). Also assume that adjusting the lease receivable (net investment) by initial direct costs reduces the effective rate of interest to 9%.

3. The lease term is six years and the lessor paid $96,000 to acquire the asset (sales-type lease).

The lease term is three years and the lessor paid $120,000 to acquire the asset (operating lease) prepare the appropriate entries for the lessor to record the lease, the initial payment at its beginning, and at the December 31 fiscal year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar.)