On January 1, 2019 Day Co. leased a new machine from Parr with the following pertinent information: Lease term 6 years Annual rental payable at the beginning of each year $50,000 Useful life of machine 8 years Day's incremental borrowing rate 15% Implicit interest rate in lease (known by Day) 12% Present value of annuity of 1 in advance for 6 periods at 12% 4.61 15% 4.35 The lease passes ownership of the machine to Day at the termination of the lease. The cost of the machine on Parr's accounting record is $375,500. Hint: see bottom of pages 839 - 841 (chapter 15) of your text book for an illustrative example. Please write your answers in the space provided in each question. QUESTIONS: 1. At the beginning of the lease term, Day should record a lease liability of a. $375,500 b. $230,500 c. $217,500 d. $0 2. Is this a capital or operating lease? 3. Record/Journalize the entry Day should make at the inception/beginning of the lease Jan 1, 2019 4. Record/journalize Day's annual lease payment at end of 2019 5. Record/journalize Day's annual interest payment at end of 2019 (use the effective interest rate method) 6. How much is Day's lease liability at the end of 2019. 7. Record/journalize the depreciation @ the end of 2019