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Question 4 Leasing (10 points) The Montana Corporation signed a 5-year capital leasing contract with Tuky Corporation and agrees to make annual payments of 10,000 at the end of each year. Montana Corporation capitalizes the leasing at its borrowing rate (at the inception of the lease) of 8%. The useful life of this leasing asset is 5 years and has no residual value. Montana uses straight-line depreciation method to allocate the cost Required: Please prepare journal entries related with this transaction for the first two years (keep 2 digit after decimal for the calculation). Beginning of the contract Dr. Leasing asset 39927.1 (1p) Cr. Leasing liability 39927.1 (1p) At the end of the first year Dr. Leasing liability 6805.83 (1p) Interest expense 3194.17 (1p) Cr. Cash 10,000 (1p) Dr. Depreciation expense 7985.42 (1p) Cr. Accumulated depreciation 7985.42 (1p) At the beginning of the second year Dr. Leasing liability 7350.30 (1p) Interest expense 2649.70 (1p) Cr. Cash 10,000 (1p) Dr. Depreciation expense 7985.42 Cr. Accumulated depreciation 7985.42