ABC Limited is a lessee and it has entered into a non-cancellable lease agreement for an equipment on 1 January 2019. The following data is relevant:

1. The lease term is 4 years. Lease payments is $770,000 per annum, payable on 1 January of each year, with the first payment on 1 January 2019.

2. The equipment has a useful life of 6 years with no residual value.

3. ABC Limited depreciates similar equipment on a straight-line basis.

4. The interest rate implicit in the lease is 8% per annum.

Present value of an ordinary annuity of 1 for 4 years at 8% = 3.31213 Present value of an ordinary annuity of 1 for 6 years at 8% = 4.62288 Present value of an annuity due of 1 for 4 years at 8% = 3.5771 Present value of an annuity due of 1 for 6 years at 8% = 4.99271

1. Calculate the present value of the four lease payments on 1 January 2019.

2. Prepare the journal entries related to the lease agreement on 1 January 2019 and 31 December 2019. (Answers should be rounded to the nearest dollar.)