On January 1, 2020, Grouper Company contracts to lease equipment for 5 years, agreeing to make a payment of $154,201 at the beginning of each year, starting January 1, 2020. The leased equipment is to be capitalized at $643,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Grouper's incremental borrowing rate is 6%, and the implicit rate in the lease is 10%, which is known by Grouper. Title to the equipment transfers to Grouper at the end of the lease. The asset has an estimated useful life of 5 years and no residual value.

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On January 1,2020, Grouper Company contracts to lease equipment for 5 years, agreeing to make a payment of $154,201 at the beginning of each year, starting January 1, 2020. The leased equipment is to be capitalized at $643,000. The asset is to be amortized on a double-declining-balance basis, and the obligation is to be reduced on an effective-interest basis. Grouper's incremental borrowing rate is 6%, and the implicit rate in the lease is 10%, which is known by Grouper. Title to the equipment transfers to Grouper at the end of the lease. The asset has an estimated useful life of 5 years and no residual value. Prepare the journal entries that Grouper should record on January 1, 2020. (Credit account titles are automatically indented when amount Is entered. Do not indent manually. If no entry is required, select "No Entry" for the occount titles and enter O for the amounts. Round present value foctor calculations to 5 decimal places, eg. 1.25124 and the final answers to 0 decimal ploces, eg. 5,275.)