Indiana Jones Corporation enters into a 7-year lease of equipment on January 1, 2014, which requires 7 annual payments of $37,050 each, beginning January 1, 2014. In addition, Indiana Jones guarantees the lessor a residual value of $18,590 at lease-end. The equipment has a useful life of 7 years. Prepare Indiana Jones January 1, 2014, journal entries assuming an interest rate of 11%.

TABLE 6-2 PRESENT VALUE OF 12% 92593 86957 75614 91743 79719 .77218 63552 56743 49718 63017 58349 54027 50025 .56447 .51316 48166 .50187 32197 28748 22917 42241 35218 42888 39711 31728 21494 31863 32618 23199 31524 27454 21763 19785 29189 27027 25025 23171 10687 14564 11611 17843 06110 19866 10067 07379 04017 12641 11597 08170 07361 08831 05974 04187 03738 01997 01737 01510 04849 .05731 06915 05210 04736 03194 02878 07889 .03914 06763 01894 00751 02104 01896 01708 01538 01691 01510 01348 01204 01075 05799 02674 02430 02210 00494 04971