On January 1, 2018, Company LL enters into a lease agreement for machinery with a lease term of 8 years and annual lease payments of $150,000, payable at the beginning of each year. The interest rate implicit in the lease is 5.5 percent. The machinery has a fair value of $1,200,000.

Prepare the journal entries to record the lease at inception, the first lease payment, and the interest expense for the first year.