Timmer Company signs a lease agreement dated January 1, 2013, that provides for it to lease equipment from Landau Company beginning January 1, 2013. The lease terms, provisions, and related events are as follows:

The lease is noncancelable and has a term of 5 years.

The annual rentals are $83,222.92, payable at the end of each year, and provide Landau with a 12% annual rate of return on its net investment.

Timmer agrees to pay all executory costs at the end of each year. In 2013, these were insurance, $3,760; property taxes, $5,440. In 2014: insurance, $3,100; property taxes, $5,330.

There is no renewal or bargain purchase option.

Timmer estimates that the equipment has a fair value of $300,000, an economic life of 5 years, and a zero residual value. Timmer's incremental borrowing rate is 16%, it knows the rate implicit in the lease, and it uses the straightline method to record depreciation on similar equipment.

Prepare journal entries on the books of Timmer for 2013 and 2014.

If required, round your answers to the nearest cent. For compound entries, if an amount box does not require an entry, leave it blank.