XYZ Inc. is a manufacturer of specialized equipment which offers a leasing alternative. Provide journal entries in the books of lessor. The data relative to a typical lease are as follows: 1. The non-cancellable fixed portion of the lease term is 5 years. 2. The lessor is to receive equal annual payments over the term of the lease. 3. The lease is initiated on January 1, 20XX. Payments are due on December 31 for the duration of the lease term. 4. The cost of the equipment to XYZ Inc. is 90,000. The lessor incurs cost associated with the inception of the lease in the amount of 1,500. 5. The selling price of the equipment for an outright purchase is 130,000. 6. The equipment is expected to have a residual value of 2,000. 7. The lessor desires a return of 10% (the implicit rate).