American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2013. The lease agreement for the $4.2 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value. Barton and Bartons implicit interest rate was 9% (also American Food Services incremental borrowing rate). (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

1) Prepare an amortization schedule for the four-year term of the lease.

Year Laese payments Effective Interest Decrease in balance outstanding balance

2013 ______ ___________ ___________ ________

2014 ________ ____________ _____________ _________

2105 _________ ________ ________ ________

2016 _________ ____________ _________ ____________

2) Prepare the journal entry for the first lease payment on December 31, 2013. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

December 31 2013

Interest expense_____

Lease payable________

Cash__________

3) Prepare the journal entry for the the third lease payment on December 31, 2015. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) December 31 2015 Interest expense_____ Lease payable________ Cash____________