Terms of a lease agreement and related facts were as follows:

1. The lease asset had a retail cash selling price of $134,000. Its useful life was six years with no residual value (straight-line depreciation).
2. Annual lease payments at the beginning of each year were $27,970, beginning January 1.
3. Lessors implicit rate when calculating annual rental payments was 10%.
4. Costs of $2,762 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 $134,000 to acquire the asset (operating lease). 2. The lease term is six years and the lessor paid $134,000 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 $102,000 to acquire the asset (sales-type lease).