Refer to the data in PE 9-8. The interest included in the first lease payment is $2,765. Make the necessary journal entry to record the first $4,500 lease payment at the end of the first year.

Data from PE 9-8

On January 1, MMD Company entered into a lease for equipment rental. Th e company agreed to pay $4,500 per year for 10 years. The present value of all 10 lease payments is $27,651. Assuming the company classified the lease as an operating lease, make the necessary journal entry to record the payment of the first year’s rent expense for the equipment. The first lease payment is made at the end of the year.