On January 1, 2017, Crane Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Crane to make annual payments of $8,199 at the beginning of each year, starting January 1, 2017. The machine has an estimated useful life of 6 years and a $5,200 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Crane uses the straight-line method of depreciation for all of its plant assets. Cranes incremental borrowing rate is 11%, and the lessors implicit rate is unknown.

Compute the present value of the minimum lease payments. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

(A)The Present Value of the minimum lease payments: $_____________________

Prepare all necessary journal entries for Crane for this lease through January 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,971.)

*Need help understanding the individual entries for: recording lease, first payment, depreciation, interest, and second payment.)

Date Account Titles and Explanation Debit Credit (To record first payment.) To record depreciation.) To record interest.) To record second payament.)