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Less-E Inc. leases a bulldozer from Less-O Inc on Jan I", 2023 for four yeara...

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Accounting

Less-E Inc. leases a bulldozer from Less-O Inc on Jan I", 2023 for four yeara between Jan I", 2023 and Dec 31'',2026.
Less-O's bulldozer has a book value of $1,000,000 on Jan I"',2023
Less-E agrees to make four equal payments to Less-O on the following days: Jan 1",2023; Dec 31",2023; Dec 31",2024; and Dec 31",2025.
The useful life of the bulldozer is four years at the end of which the residual value is 150,000
Less-E's borrowing rate for similar transactions is 15%.
Let's assume this is a sales-type lease without profit for the lessor. That is, the present value of the lessee's payments equal the book value less the present value of any residual value returned to the lessor.
Record journal entries for both the lessor and the lessee.

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