On January $1,2022,$ Starenew Leasing leased equipment to Moon Corp under a finance$/$sales$-$type lease designed to earn Starnew a $12\%$ rate of return for providing long$-$term financing. The lease agreement specified:

a$.5$ annual payments of $$110,000$ beginning January $1,2022,$ the beginning of the lease. and each December $31$ thereafter through $2025.$

b$.$ The estimated useful life of the leased equipment is $7$ years with no residual value. Its cost to Starnew was $$458,294.$

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

d$.$ On December $31,2026,$ at the end of the five$-$year lease term, the equipment is expected to be worth $$45,000,$ and Moon corp has the option to purchase it for $$25,000$ on that date.

Required:

a$)$ Calculate the amount Moon Corp should record as a right$-$of$-$use asset and lease liability

for this finance lease.

b$)$ Prepare an amortization schedule that describes the pattern of interest expense for Starenew over the lease term.

c$)$ Prepare the appropriate entries for both companies throughout the lease term.