Elf Leasing purchased a machine for $500,000 and leased it to IGA, Inc., on January 1, 2016.

Lease description: Quarterly rental payments $32,629 at beginning of each period Lease term 5 years (20 quarters) No residual value; no BPO Economic life of machine 5 years Implicit interest rate and lessees incremental borrowing rate 12% Fair value of asset $500,000 Collectibility of the rental payments is reasonably assured, and there are no lessor costs yet to be incurred. Required: Prepare appropriate entries for both IGA and Elf Leasing from the inception of the lease through the second rental payment on April 1, 2016. Depreciation is recorded at the end of each fiscal year (December 31).