JI Company signs a lease agreement dated January 1, 2019, that provides for it to lease computers from Appleton Company beginning Janwary 1, 2019. The lease terms, provisions, and related events are as follows:

1. The lease term is 5 years. The lease is non-cancelable and requires equal rental payments to be made at the end of each year. The computers are not specialized for J.
2. The computers have an estimated useful life of 5 years, a fair value of $300,000, and zero estimated residual value.
3. J agrees to pay all executory costs directly to a third party.
4. The lease contains no renewal or bargain purchase options.
5. The annual payment is set by Appleton at $83,222.92 to earn a rate of return of 12% on its net investment (The PV factor for 5 payments at 12% is 3.604776). J is aware of this rate. J's incremental borrowing rate is 10%.
6. JJ uses the straight-line method to record depreciation on similar equipment.

Required

1. Examine and evaluate each capitalization criteria and determine what type of lease this is for J.
2. Calculate the amount of the asset and liability of I at the inception of the lease (round to the nearest dollar).
3. Prepare a table summarizing the lease payments and interest expense
4. Prepare journal entries for JI Co. for the years 2019 and 2020.