On January 1, 2019, Rockville Inc. entered into a 9-month, non-renewable lease to rent office equipment. The lease payment is $2,100 per month first due on January 31, 2019. The interest rate implicit in the lease is 7.2% per annum (0.6% per month) and Rockville, which has an incremental borrowing rate of 6.4% per year, knows this. Rockville has a December 31 year-end and depreciates similar equipment on a straight-line basis.

Required:

a. Assume that Rockville Inc. elects to expense leases of a short-term nature. Prepare the journal entries for the month of January 2019.

b. Assume that Rockville Inc. does not elect to expense leases of a short-term nature. Prepare the journal entries for the month of January 2019.