On January 1, 2013, Holbrook Company leased a building under a three-year operating lease from Thornhill Companies. The annual rental payments are $40,000 on January 1, 2013; $30,000 on January 1, 2014; and $20,000 on January 1, 2015. Prepare journal entries for Holbrook Company for each year, including any necessary adjusting journal entries. Prepare journal entries for Thornhill Companies for each year, including any necessary adjusting journal entries. On June 30, 2013, Blue, Inc., leased a machine from Big Leasing Corporation. The lease agreement qualifies as a capital lease and calls for Blue to make semiannual lease payments of $281,454 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2013. Blue's incremental borrowing rate is 10%, the same rate Big uses to calculate lease payment amounts. Depreciation is recorded on a straight-line basis at the end of each fiscal year