Wildhorse Corporation leases a building to Ayayai, Inc. on January 1, 2020. The following facts pertain to the lease agreement.

1.		The lease term is 10 years with equal annual rental payments of $51,745 at the end of each year.
2.		Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.
3.		The building has a fair value of $510,000, a book value to Wildhorse of $330,000, and a useful life of 15 years.
4.		At the end of the lease term, Wildhorse and Ayayai expect the residual value of the building to be $180,000, and this amount is guaranteed by Baden, Inc., a third party.
5.		Wildhorse wants to earn a 5% return on the lease, and collectability of the payments is probable.

Assume the rate of return to amortize the net lease receivable to zero is 13.24%. Prepare the journal entries to record the entries for Wildhorse for 2020 and 2021.

Date	Account Titles and Explanation	Debit	Credit
1/1/2012/31/2012/31/21
1/1/2012/31/2012/31/21
1/1/2012/31/2012/31/21

Prepare the journal entries for Ayayai (the lessee) for 2020 and 2021, assuming the rate implicit in the lease is known to Ayayai.

Date	Account Titles and Explanation	Debit	Credit
1/1/2012/31/2012/31/21
1/1/2012/31/2012/31/21
1/1/2012/31/2012/31/21