Broncos Company leased equipment from Denver-Tech Leasing on January 1, 2023.

Other information:

Lease term 5 years

Annual payments $25,000 on January 1 each year (The first lease payment is made on January 1, 2023 on the lease contract day)/

Life of asset 5 years

Implicit interest rate 7.25%

There is no expected residual value.

Required:

1) Compute the present value of the lease payments for the right-of-use asset.

2) Prepare the lease amortization schedule for 5 years.

3)Prepare appropriate journal entries for Broncos (lessee under finance lease) for 2023. Assume straight-line amortization and a December 31 year-end. Round your answers to the nearest whole dollar amounts.