Accounting for Leases On January 3, 2017, Hanna Corporation signed a lease on a machine for its manufacturing operation. The lease requires Hanna to make six annual lease payments of $12,000 with the first payment due December 31, 2017. Hanna could have financed the machine by borrowing the purchase price at an interest rate of 7%. a. Prepare the journal entries that Hanna Corporation would make on January 3 and December 31, 2017, to record this lease assuming its i. an operating lease and ii. a capital lease. Round answers to the nearest whole number. If no entry is required, select "No entry" from the drop-down answer options for the debit and credit entries. the lease reported as an operating lease. General Journal Date Description Debit Credit Jan. 3 To record inception of lease Dec. 31 To record depreciation expense. Dec. 3 To record payment on lease. ii. the lease is reported as a capital lease. General Journal Debit Date Description Credit Jan. 3 To record inception of lease Dec. 31 To record depreciation expense. Dec. 31 Cash To record payment on lease. b. Assuming that the lease is treated as a capital lease, post the journal entries of part a to the appropriate T-accounts. Leased Asset Cash Interest Expense Lease Liability Accumulated Depreciation Depreciation Expense c. Show how the entries posted in part b would affect the financial statements using the financial statement effects template. Income Statement Balance Sheet Cash Asset+Noncash Assets - Contra Asset= Liabilities Contrib. Capital+Earned Capital Transaction = Net Income Revenue Expenses 1. Signed a capital lease. -$ $ 2. Depreciation on leased asset 3, Made annual lease payment + +