On January 1, 2021, Kiki Co. leased machinery from Jiji Co. Presented below is selected information about the non-cancelable lease agreement, the leased equipment, and the parties to the lease.

Kiki borrows at 5% and is unaware and unable to determine that Jijis implicit rate is 4%.

Jiji paid $180,000 for the machine and at the inception of the lease, its fair value is $240,000.

The machine has a $21,000 residual value, none of which is guaranteed, and an estimated 5-year life.

The lease requires beginning-of-year rental payments over its 3-year term, i.e., rentals are due every January 1 and the lease ends December 31, 2023.

RequiredPrepare all lease-related journal entries that Jiji should record over the three-year lease, supported by an appropriate amortization schedule, under the following assumption: Kiki returns the machine when the lease ends, and after determining it to have a fair value of $15,000, Jiji decides to place it into production as backup equipment whenever the companys operations approach full capacity