dares manufacturing company leased a piece of nonspecialized machinery for use in its operations from orion leasing on jan 1. the 7 year lease requires lease payments of 2,300 due on jan of each year. the machinery is estimated to have a 7 year life, is depreciated on the straight line method, and will have no residual value at the end of the lease term. the present value of the lease payments using 11.4% and the asset's fair value on the date the lease is signed both equal $11,919. orion paid fair value to acquire the equipment the day before lease commencement. the lessors implicit rate of 11.4% is known to dares. collection of all lease payments is reasonably assured. prepare dares manufacturing journal entries at the commencement of the lease and at the end of the first year. 1.Prepare the entry at the lease commencement date. exclude the first annual lease payment from this entry. 2. Prepare the entry for the first annual lease payment made on jan 1. 3. record dares year end interest accrual related to the lease on dec 31. 4. Record dares entry for amortization on the leased machinery on dec 31