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On January $1,2024,$ Lesco Leasing leased equipment to Quality Services under a finance$/$sales$-$type lease designed to earn Lesco a

$12\%$ rate of return for providing long$-$term financing. The lease agreement specified:

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)$

a$.$ Ten annual payments of $$56,000$ beginning January $1,2024,$ the beginning of the lease and each December $31$ thereafter through

b$.$ The estimated useful life of the leased equipment is $10$ years with no residual value. Its cost to Lesco was $$322,741.$

c$.$ The lease qualifies as a finance lease$/$sales$-$type lease.

d$.$ A $10-$year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as

required. Payments of $$5,000$ per year are specified, beginning January $1,2024.$ Lesco was to pay this cost as incurred, but lease

payments reflect this expenditure. Also included in the $$56,000$ payments is an insurance premium of $$4,000$ providing coverage

for the equipment.

Required:

Prepare the appropriate entries for both the lessee and lessor related to the lease on January $1,2024.$

Prepare the appropriate entries for both the lessee and lessor related to the lease on December $31,2024.$

req $1$:

$1.$ Record the beginning of the lease for Quality Services

$2.$ Record the lease and maintenance payment made by Quality.

$3.$ Record the beginning of the lease for Lesco.

$4.$ Record the lease and maintenance payment received by Lesco.

req $2$:

$1.$ Record the lease and maintenance payment made by Quality.

$2.$ Record amortization.

$3.$ Record the lease and maintenance payment received by Lesco.

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