On January $1,2022,$ Pharoah Inc. entered into an agreement to lease $20$ computers from Drummond Electronics. The terms of the lease agreement require three annual rental payments of $$26,000($including $10\%$ interest$)$ beginning December $31,2022.$ The present value of the three rental payments is $$64,656.$ Pharoah considers this a finance lease.

Prepare the journal entry to record the lease agreement on the books of Pharoah Inc. on January $1,2022.($Credit account titles are automatically indented when amount is entered. Do not indent manually.$)$

Date Account Titles and Explanation

Debit

Credit

Jan. $1$