On January 1, 2024, Ghosh Industries leased a high performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh.
∙ The equipment cost Ghosh $956,000 and has an expected useful life of five years.
∙ Ghosh expects the residual value at December 31, 2027, will be $300,000.
∙ Negotiations led to the lessee guaranteeing a $340,000 residual value.
∙ Equal payments under the finance/sales-type lease are $200,000 and are due on December 31 of each year with the first payment being made on December 31, 2024.
∙ Karrier is aware that Ghosh used a 5% interest rate when calculating lease payments.

Required:
1. Prepare the appropriate entries for both Karrier and Ghosh on January 1, 2024, to record the lease.
2. Prepare all appropriate entries for both Karrier and Ghosh on December 31, 2024, related to the lease.