Christopher Donegan Company as lessee records a capital lease of machinery on January 1, 2013. The seven annual lease payments of $525,000 are made at the end of each year. The present value of the lease payments at 10% is $2,556,000. Donegan uses the effective-interest method of amortization and straight line depreciation (no residual value).

Complete the following amortization table for the years 2013 to 2015.

Date	Interest	Lease Payment	Reduction of Liability	Lease Liability
1/1/13				$2,556,000
12/31/13
12/31/14
12/31/15

Prepare all of Donegans journal entries for 2013.

1/1/2013

12/31/2013

12/31/2013

Assume the same information for Donegan Company, except there is a Guaranteed Residual Value of $100,000. Please complete the first two line of the amortization table.

Date	Interest	Lease Payment	Reduction of Liability	Lease Liability
1/1/13
12/31/13