The Bobo Company leased equipment from Bolinger Industries on January 1, 2018. Bolinger purchased the equipment at a cost of $270,000.

Other information:

Lease term	3 years
Annual payments	$120,000 beginning Jan. 1, 2018
Life of asset	3 years
Implicit interest rate	8%
Lessee's incremental rate	8%
Present value of an ordinary annuity of $1, i = 8, n = 3	2.5771
Present value of an annuity due of $1, i = 8, n = 3	2.7833

Required:

Round your answers to the nearest whole dollar amounts.

1. Calculate the amount of selling profit that Bolinger would recognize in this sales-type lease. Round to nearest dollar. Show calculations.

2. Prepare the appropriate journal entries for Bolinger on January 1, 2018. Round to nearest dollar. Show calculations.