On 1/1/2020 a company purchased a large building for $2,500,000 to be leased out. The building has a 45-year useful life with no residual value. This building was leased immediately by Greenscape Co, which operates as a calendar year-end company. The lease is $162,500 every year, payable on 1/1 each year, including 1/1/2020(the first year). There is a ve year lease term, and the rate of interest is 7%. This is an Operating Lease.

Complete the following Journal Entries:

1. 1/1/20, lease commencement

2. 12/31/20, record lease payment

3. 12/31/20, record lease expense

4. 12/31/21, record lease payment

5. 12/31/21, record lease expense

Please show your calculations of the lease expense