Example #1, On January 1, 2016 a company leased an automobile by signing a lease with a market (present value) of $100,000, with 4% implicit interest rate. The lease is to be paid in three equal payments of $36,034.85 at the end of each year beginning December 31, 2016. Below is the loan reduction schedule (please be sure you understand it)!!! ! !! Be . Date Balace interest expense Cash Payment Reduction in Principal Principal Balance 2016 100,000 100,000.00'\" .04=4,000.00 36,034.85 36,034.854,000.00=32,034.85 100,000.0032,034.85=67,965.15 2017 67,965.15 67,965.15* .04=2,718.60 36,034.85 36,034.852,718.60=33,316.25 67,965.15-33,316.25=34,648.90 2018 34,648.90 34,648.90* .04=1,385.95 36,034.85 36,034.851,385.95=34,648.90 34,648.9034,648.90=0 Capital Lease - treat like purchase of asset and note payable 3) PREPARE THE JOURNAL ENTRIES FOR 2016: Date Account Name Debit Credit 1/1/20 16 12/31/201