Browns Corp. reports under ASPE, leases machinery on January 1, 2023, and records this as a capital lease. Seven annual lease payments of $127,277 are due at the beginning of each year during the lease term. The present value of the lease payments at 10% is $609,757. The title passes to Browns at the end of the lease.

Browns use the effective interest method of amortization for the lease. The company uses straight-line depreciation over the equipment's expected useful life of eight years, with no residual value.

Instructions:

a) Prepare a lease amortization table for 2023, 2024 and 2025.

b) Prepare all applicable general journal entries for Browns Corp. that are related to this lease for 2023 and for January 1, 2024.