January 1: Pane purchases equipment on account that they plan to lease to others. Pane then entered into an operating lease agreement with Big Pig Company. Pane agrees to pay the annual insurance premiums (and does so on January 1). The annual lease payments are received in cash at the beginning of each year. Please make the appropriate journal entries for January 1. Additional information is below:

Equipment Cost: $375,000

Estimated Life of Equipment (years) 7

Residual Value $0

Lease Term (in years) 5

Annual Lease Payment $35,000

Annual Insurance Premium $980.

NOTE: Do not bother with prepaid/deferred accounts for this transaction, since the firm only

prepares financial statements as of December 31.

At the beginning of the 2019, the company's 1/1/2019 trial balance was as follows: Credit Debit 27,292,736 21,002,000 7,688,900 437,000 437,000 983,100 983,100 956,000 480,000 Number Title 100 Cash 110 Accounts Receivable 120 Inventory 130 Machinery 135 Accumulated Depreciation - Machinery 160 Buildings 165 Accumulated Depreciation - Building 170 Land 190 Goodwill 200 Accounts Payable 220 Employee Income Tax Withholding Payable 222 Federal Unemployment Tax Payable 224 State Unemployment Tax Payable 226 F.I.C.A. Payable 300 Common Stock 305 APIC - Common 310 Preferred Stock 315 APIC - Preferred 320 Treasury Stock 340 Retained Earnings 11,665,800 2,506,900 12,900 67,725 1,604,416 4,900,000 5,060,000 1,800,000 5,060,000 70,000 24,811,895 58,909,736 58,909,736