On January 1, 2021, Western Edison Company leased equipment to SmartStream Electric Company under a nine-year lease arrangement. Western Edison seeks a 10% return on its lease investments. The agreement specifies annual payments of $15 million beginning January 1, 2021, and at each January 1 thereafter through 2029. The PV of the nine required payments is $103.5 million and the FV of the leased equipment is $117 million as of January 1, 2021. The equipment had been manufactured by Northern Edison for $108 million and is expected to have a useful life of 11 years with no salvage value. Northern incurred $10,000 in legal fees for the preparation of the lease documents. Because the lease term is only for nine years, the equipment has an expected residual value of $31.8 million. Required:
Prepare the two January 1, 2020 journal entries for The Northern Edison Company.