Hi. I was hoping to get help with the initial journal entry for present value and recording the first payment of $20,000.

Six ovens were rented on December 31, with $20,000 charged to rent expense. The lease runs for 6 years with an implicit interest rate of 5%. At the end of the 6 years, Peyton will own them. Make any necessary adjusting entries.

I calculated the present value as $20,000(5.325) = $106,590

Debit-Ovens $106,590

Credit-Lease Liability $106,590

I'm unsure of how to record the initial payment of $20,000 as a journal entry. Thanks.