Boerne Inc entered into a one-year contract to lease equipment from Spring Branch Leasing on January 1, 2018. The fair value of the leased equipment at the inception of the lease was $600,000. Lease term 1 year (4 quarterly periods) Quarterly lease payments $30,000 at Jan. 1, 2018, and at April 1, July 1, and Oct 1. Economic life of asset 5 years Interest rate charged by the lessor 10%

Required:

Boerne elected the short-term lease option. Appropriate adjusting entries are made annually. Prepare appropriate entries for Chance from for the first two quarters of 2018.