Brow Corp. leased equipment from Rachel Finance, with the following details: 

■ Commencement date: January 1, 2019. 

■ Term of lease: 4 years.

■ Payments: $45,000 per annum first due at the commencement date. 

■ Residual guarantee: $15,000. Expected payout is $5,000. 

■ Interest rate implicit in the lease: 5%. Lessee is able to readily determine this. 

■ Incremental borrowing rate: 7%. 

■ Estimated useful life of equipment: 8 years. 

■ Initial direct costs—lessee: $7,000. 

■ Depreciation method: Straight-line. 

■ Year end: December 31.

Required:

Prepare Brow Corp’s journal entries for 2019 and January 1, 2020.