The details of the equipment lease agreement that Taj Corp. (lessee) recently entered into with Stanger Leasing (lessor) are: 

■ Commencement date: January 1, 2019. 

■ Term of lease: 12 months. 

■ Payments: $1,000 per month first due at the commencement date. 

■ Other: Title does not transfer and the lease does not include any renewal or purchase options. 

■ Interest rate implicit in the lease: Lessee not able to readily determine. 

■ Incremental borrowing rate: 9% per annum (0.75% per month). 

■ Estimated useful life of equipment: 8 years. 

■ Depreciation method: Straight-line. 

■ Year end: December 31.

Required:

a. Assume that Taj Corp. elects to expense leases of a short-term nature. Prepare the journal entries for the month of January 2019 and February 1, 2019. 

b. Assume that Taj Corp. does not elect to expense leases of a short-term nature. Prepare the journal entries for the month of January 2019 and February 1, 2019.