On 1/1/20 you lease equipment. The term of this capital lease is 3 years.

The payments of $35,000 are to be made at the beginning of each year starting on 1/1/20. There is no residual value. The fair market value of this equipment on 1/1/20 is $110,000. The present value of the minimum lease payments is $97,414. The estimated economic life of the equipment is 6 years. You use the straight-line method to record depreciation. The lessor set the payments to earn a return of 8%. You are aware of the lessors desired return. This is an operating lease.

Note: Be sure to show the date of each journal entry. The right journal entry on the wrong date is wrong.

1. Prepare an amortization table for all three years.
2. Prepare the journal entries for 1/1/20
3. Prepare the journal entries for 12/31/20
4. Prepare the journal entries for 1/1/21
5. Prepare the journal entry for 1/1/22