On January 1, 2011, Hanlin Corporation agrees to lease a piece of equipment for an annual payment of $3,000 with the first payment being made immediately. The lease will run for 4 years and the life of the equipment is 6 years. Hanlin's incremental borrowing rate is 9 percent. No bargain purchase option exists, the ownership of the equipment will not be transferred to Hanlin at the end of the lease, there is no alternative use for the asset, and the payments do not approximate the fair value of the equipment. The entry made to record the first lease payment on January 1, 2011 will be: Lease Liability 3,000 Cash 3,000 Right-of-Use Asset 10,594 10,594 Lease Liability Rent Expense 3,000 Cash 3,000 Prepaid Rent 3,000 Cash 3,000 Leased Asset 12,000 Lease Liability 12,000