On January 2, 2019, Lafayette Machine Shops Inc. signed a 10-year noncancelable lease for a heavyduty drill press, stipulating annual payments of $15,000 starting at the end of the first year, with title passing to Lafayette at the expiration of the lease. Lafayette treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years with no salvage value. Lafayette uses straight-line depreciation for all of its fixed assets. Aggregate lease payments were determined to have a present value of $92,170, based on implicit interest of 10%. For 2019, Lafayette should record:

Transcribed Image Text:

Interest Depreciation Expense Expense $0 $7,717 $9,217 $9,217 $0 $6,145 $6,145 $9,217 a. b. C. d.