Big Bucks leased equipment to Shannon Company on July 1, 2018. The lease payments were calculated to provide the lessor a 10% return. Ten annual lease payments of $36,000 are due each July 1, beginning July 1, 2018.
Required
1. Prepare the journal entries to record the lease by Shannon at July 1, 2018, and at December 31, 2018, the end of the reporting period. Consider this to be a finance lease. Round your answers to the nearest whole dollar amounts.
2. Prepare the journal entries to record the lease by Shannon at July 1, 2018, and at December 31, 2018, the end of the reporting period. Consider this to be an operating lease. Round your answers to the nearest whole dollar amounts.

Question

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The Answer of Big Bucks leased equipment to Shannon Company on July 1, 2018. The lease payments were calculated to provide the lessor a 10% return. Ten annual lease payments of $36,000 are due each July 1, beginning July 1, 2018.
Required
1. Prepare the journal entries to record the lease by Shannon at July 1, 2018, and at December 31, 2018, the end of the reporting period. Consider this to be a finance lease. Round your answers to the nearest whole dollar amounts.
2. Prepare the journal entries to record the lease by Shannon at July 1, 2018, and at December 31, 2018, the end of the reporting period. Consider this to be an operating lease. Round your answers to the nearest whole dollar amounts.

Big Bucks Leased Equipment to Shannon Company on July 1