Diablo Company leased a machine from Juniper Corporation on January 1, 2016. The machine has a fair value of $19,000,000. The lease agreement calls for five equal payments at the end of each year in the amount of $5,270,785. The useful life of the machine was expected to be five years with no residual value. The appropriate interest rate for this lease is 12%.

Prepare the appropriate journal entries:

1. Record the entry for Diablo Company at the inception of the lease.

2. Record the entry for the first lease payment.

3. Record the entry for the second lease payment.