Bridgeport Inc. manufactures an X-ray machine with an estimated life of 12 years and leases it to Indigo Medical Center for a period of 10 years. The normal selling price of the machine is $528,538, and its guaranteed residual value at the end of the non-cancelable lease term is estimated to be $15,700. The hospital will pay rents of $64,000 at the beginning of each year. Bridgeport incurred costs of $275,000 in manufacturing the machine and $15,400 in legal fees directly related to the signing of the lease. Bridgeport has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%. Indigo Medical Center has an incremental borrowing rate of 5% and an expected residual value at the end of the lease of $10,000.

Prepare all of the lessees journal entries for the first year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 5,275.)

Account Titles and Explanation	Debit	Credit
(To record the lease of x-ray equipment using finance lease method.)
(To record payment of annual lease obligation.)
(To record accrual of annual interest on lease obligation.)
(To record amortization expense for year 1 using straight-line method.)