Laura Leasing Company signs an agreement on January 1, 2017, to lease equipment to Whispering Company. The following information relates to this agreement.

1.		The term of the noncancelable lease is 5 years with no renewal option. The equipment has an estimated economic life of 5 years.
2.		The fair value of the asset at January 1, 2017, is $85,700.
3.		The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $6,400, none of which is guaranteed.
4.		Whispering Company assumes direct responsibility for all executory costs, which include the following annual amounts: (1) $820 to Rocky Mountain Insurance Company for insurance and (2) $1,700 to Laclede County for property taxes.
5.		The agreement requires equal annual rental payments of $19,964.15 to the lessor, beginning on January 1, 2017.
6.		The lessees incremental borrowing rate is 12%. The lessors implicit rate is 11% and is known to the lessee.
7.		Whispering Company uses the straight-line depreciation method for all equipment.
8.		Whispering uses reversing entries when appropriate.

Prepare an amortization schedule that would be suitable for the lessee for the lease term.

Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessees annual accounting period ends on December 31.