On January 1, 2018, Harlon Consulting entered into a three-year lease for new office space agreeing to lease payments of: $5,000 in 2018, $6,000 in 2019 and $7,000 in 2020. Payments are due on December 31 of each year with the first payment being made on December 31, 2018. Harlon is aware that the lessor used a 5% interest rate when calculating lease payments.

Required:

1. Prepare the appropriate entries for Harlon Consulting on January 1, 2018 to record the lease.

2. Prepare the appropriate entries for Harlon Consulting on December 31, 2018 to record the lease.

3. Prepare the appropriate entries for Harlon Consulting on December 31, 2019 to record the lease.

4. Prepare the appropriate entries for Harlon Consulting on December 31, 2020 to record the lease.